CarMax, Inc. (KMX) in its Q1 Quarter Fiscal Year 2025 Earnings Release Conference Call, presented a mixed financial performance with total sales of $7.1 billion, marking a 7% decrease from the previous year. Despite the drop in total sales and unit sales, the company reported positive developments, such as a 7% year-over-year increase in CarMax Auto Finance income, a 5% increase in used-saleable inventory units, and a decrease in used total inventory units by 4%. CarMax also highlighted its strategic initiatives aimed at driving future growth, including expanding vehicle sourcing capabilities, launching in new markets, and cost-saving measures.
Key Takeaways
- CarMax’s total sales reached $7.1 billion, a 7% decrease compared to last year.
- Total unit sales declined by 3.1%, with the average selling price also down by 3%.
- The company repurchased over $100 million in shares and settled a $300 million debt.
- A record 35,000 vehicles were sourced from dealers, pointing to a diversification in vehicle sourcing.
- Used-saleable inventory units grew by 5%, while used total inventory units fell by 4%.
- CarMax Auto Finance income grew by 7% year-over-year.
- Executives discussed cost management strategies and plans for non-prime securitization.
Company Outlook
- CarMax is focusing on active cost management and leveraging low single-digit gross profit growth.
- The company’s strategic initiatives include expanding vehicle sourcing, enhancing omni-channel capabilities, and pursuing cost reduction opportunities.
Bearish Highlights
- Total sales and unit sales both saw a decline from the previous year.
- The company is experiencing supply issues with older vehicles that meet their quality standards.
Bullish Highlights
- Growth in CarMax Auto Finance income suggests a strong financial aspect of the business.
- The company is expanding its market share, with some markets exceeding 10%.
- CarMax is not affected by the widespread issues with CDK dealer software.
Misses
- Despite positive trends, the decline in total sales and unit sales indicates a challenging market.
