CarMax Inc. the number one seller of preowned vehicles in the US. The company has reported its financial results for the first quarter of fiscal year 2024, which ended on May 31, 2023.
Here are the key highlights:
1. Net revenues for the quarter were $7.7 billion, representing a 17.4% decline compared to the same period last year.
2. Retail used unit sales decreased by 9.6%, and comparable store used unit sales declined by 11.4% compared to the first quarter of the previous year.
3. Wholesale units declined by 13.6% from the prior year’s first quarter.
4. Retail and wholesale gross profit margins remained strong, with gross profit per retail used unit at $2,361 and gross profit per wholesale unit at $1,042, both in line with the previous year’s first quarter.
5. Selling, general, and administrative (SG&A) expenses decreased by 14.8% or $96.9 million from the first quarter of the previous year, primarily due to a favorable legal settlement and continued cost management efforts.
6. CarMax bought 343,000 vehicles from consumers and dealers, a decrease of 5.2% compared to the first quarter of the previous year but an improvement from the declines experienced in the third and fourth quarters of the previous fiscal year.
7. CarMax Auto Finance (CAF) income declined by 32.8% from the prior year’s first quarter, mainly due to a compression in the net interest margin percentage and higher provision for loan losses.
8. Net earnings per diluted share were $1.44, down from $1.56 in the same period last year, with the current year’s quarter benefiting from a $0.28 settlement related to a legal case.
9. CarMax’s CEO, Bill Nash, highlighted improved trends in the business despite a challenging macro environment. The company is prioritizing projects that enhance operating efficiencies and customer experiences, aiming to emerge leaner, more effective, and poised for future growth.
Overall, CarMax faced headwinds such as vehicle affordability challenges, inflationary pressures, higher interest rates, and tightening lending standards, which impacted its unit sales performance. However, the company demonstrated strong margins and cost management efforts, along with sequential improvements in various areas compared to the second half of the previous fiscal year.
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