CarMax exceeds projections in US
RICHMOND, Virginia (AP):
CarMax reported a 22 per cent jump in third-quarter earnings on Friday as the used-car dealership chain sold more cars and expanded its footprint across the United States.
The Richmond, Virginia, company earned US$130 million, or 60 cents per share, for the period ended November 30, up from US$106.4 million, or 47 cents per share, a year ago.
The results exceeded Wall Street expectations of 54 cents per share, according to Zacks Investment Research.
CarMax Inc, which runs more than 140 stores that mainly sell used cars and trucks, said revenue increased about 16 per cent to US$3.41 billion. Analysts expected US$3.26 billion.
Shares rose $5.29, or 8.7 per cent, to $65.82, in early trading on Friday.
Sales at stores open at least one year rose 7.4 per cent. That is a key metric, because it strips out the volatility of newly opened and closed locations. CarMax opened four stores during the quarter, including two in new markets. Customer traffic to its stores grew for the sixth consecutive quarter, the company said.
Used-vehicle unit sales rose 14 per cent as the company's average selling price rose more than 2 per cent to US$19,914. Wholesale-vehicle unit sales also increased 10 per cent during the quarter. New-vehicle unit sales, which make up a smaller part of CarMax's business, increased more than 10 per cent. Other revenue, which includes fees it receives from third-party lenders its customers use, increased 30 per cent.
Not so volatile
CEO Tom Folliard said in a conference call that while declines in used-car pricing impacted its competitors, CarMax has proven it can manage in all kinds of volatile environments "and this one is not as volatile as we've seen in the past".
Income from the company's auto-financing arm rose nearly 7 per cent to US$89.7 million in the quarter, as it financed more of its customers' vehicles.
Its total gross profit, after reconditioning and other costs, grew 17 per cent during the quarter. Gross profit per used vehicle sold increased 1 per cent to US$2,172 and wholesale gross profit per vehicle rose US4.5 per cent to US$927.
Expenses increased 11 per cent to US$316.6 million as the company's store base grew 16 per cent since the beginning of last year's third quarter.