CarMax said Tuesday that a solid gain in net earnings for its fiscal third quarter was the result of “strong execution in a dynamic environment.”
The environment remains dynamic, as seen by the company’s same-store sales, which began the period up by mid-single digits but finished the quarter down by 0.8 percent.
CarMax said demand softened and sales trended downward near the end of the quarter, constrained in part by spreading cases of COVID-19, the disease caused by the coronavirus, as well as by uncertainty surrounding the election and future stimulus programs.
The retailer’s net earnings rose 36 percent to $235.3 million in its fiscal third quarter ended Nov. 30 on total revenue that grew 8.2 percent to $5.18 billion.
Used-vehicle sales were up just 1.0 percent to 194,576, while wholesale vehicle sales increased 11 percent to 126,317. The rise in wholesale vehicle sales was driven by a record third-quarter buy rate, the company said in a release.
Gross profit per used vehicle of $2,151 was similar to that in the year-earlier quarter.
CarMax Auto Finance income jumped 55 percent to $176.4 million, reflecting a decrease in the provision for loan losses to $8.2 million — from $49.0 million in the year-earlier quarter — as well as an increase in net interest margin and average managed receivables.
“We delivered strong EPS growth this quarter thanks to solid execution by our teams,” said CEO Bill Nash. “Despite the near-term market challenges due to the trajectory of the pandemic, our fundamentals remain robust and reflect the strength of our diversified business model spanning retail, wholesale and auto finance.”
Nash said that that broad strength, combined with its omnichannel retail strategy, gives the retailer a unique advantage in the used-vehicle sector.
“Our omnichannel capabilities give customers the flexibility to seamlessly connect and transact with us in more ways than ever,” Nash said, adding that the company has seen an increase in online engagement.
Meanwhile, the company resumed construction activity on new locations during its third quarter, after having paused its expansion because of the pandemic. The company said it anticipates opening eight to 10 locations in fiscal 2022.
Shares of CarMax were down 5.8 percent to $94.59 in early trading Tuesday.
CarMax ranked No. 1 on Automotive News‘ list of the top 100 used-vehicle retailers in 2019, with used-vehicle retail sales of 748,961.
