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Mayank Marwah
Mayank Marwah
Articles (959) 

CarMax Posts 2nd-Quarter Earnings and Revenue Beat

Used and wholesale vehicle sales soared during the quarter

September 24, 2020 | About:

CarMax Inc. (NYSE:KMX) released its second-quarter fiscal 2021 results before the market opened on Sept. 24. The company's earnings and revenue topped projections as auto sales rebounded and customers began recommencing their regular spending patterns.

By the numbers

The Richmond, Virginia-based used car retailer recorded earnings per share of $1.79 in the quarter, which reflected 27.9% growth year over year. Analysts had projected EPS of $1.03. Revenue of billion $5.37 billion grew 3.3% from the prior-year quarter and surpassed estimates of $5.21 billion.

President and CEO Bill Nash commented the following on the company's performance:

"We are very pleased to report record revenues and profitability this quarter. The talent and commitment of our associates as well as the diversity of our business model allowed us to capitalize on the improved market environment to deliver a record quarter. In addition to our strong financial performance, we also completed the roll out of our omni-channel offerings. Consumers want to customize their own journey, and CarMax gives its customers the option to seamlessly do as much, or as little, online and in-person as they want. No other used car retailer is in the position to deliver this iconic experience the way CarMax can."

Used and wholesale vehicle sales

Used car units sales were up 3.9% year-over-year in the reported quarter. This included a comparable store used unit sales growth of 1.2% thanks to robust conversion and solid growth in online traffic.

Total wholesale vehicle unit sales gained 5.1% thanks to an increase in appraisal buy rate, which was only partly offset by the lower appraisal traffic. An extra auction day in the quarter also helped.

Key insights

CarMax's comparable store used unit sales witnessed solid growth in the first week of March. However, the coronavirus spread quickly and brought the company' sales momentum, which it carried into the start of March, to a halt. In April, the company furloughed as many as 15,000 employees. In addition, Nash waived 50% of his salary. The company cut back its marketing spending and share buyback plans were halted. As far as the second quarter is concerned, no new stores were rolled out.

To help customers shop online, the company engaged more than 750 people at its five customer experience centers (CEC) located in Atlanta, Kansas City, Raleigh, Phoenix and Richmond.CarMax's chief human resources officer Diane Cafritz said:

"(CEC) help provide our customers with a convenient and personalized car buying experience where customers can do as much of the car buying process from home as they'd like."

Guidance

The company did not issue guidance figures for earnings and revenue.

Disclosure: I do not hold any positions in the stocks mentioned.

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About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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