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Ruane Cunniff Comments on CarMax

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Feb 26, 2021
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CarMax (

KMX, Financial) is projected to post a mid-single-digit decline in revenue during the fiscal year that ends February 2021. This decline resulted entirely from COVID-related store closures that severely hindered the company's sales first in the spring and then again in the winter. Despite these challenges, CarMax adapted to the environment well, offering curbside test-drives, remote buying and home delivery. Unlike other brick-and-mortar car retailers, CarMax didn't have to stitch together these capabilities on the fly. The company was already offering an omnichannel customer experience in many of its markets before the pandemic hit. By November, CarMax was offering omnichannel in all its markets, an important development as we believe the transition to an omnichannel offering will allow the company to thrive in the coming years. Meanwhile, the company's ability to weather the COVID storm while many traditional brick-and-mortar used car dealerships shuttered was further confirmation of CarMax's strong position.

As with several of our other holdings, we were able to take advantage of the dramatic decline in the market in mid-March by adding to our investment in CarMax at $47. We subsequently sold a portion of our increased holdings later in the year given the rapid recovery in the company's share price and its resulting large weighting in the portfolio. Despite our trim, CarMax remains a top holding.

From

Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund 2020 annual report.

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