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CarMax, Inc. (NYSE:KMX) recently disclosed its financial outcomes for the fourth quarter and the entire fiscal year ending February 29, 2024, presenting mixed results amidst challenging market conditions.

The fourth quarter witnessed a slight decline in net revenues, totaling $5.6 billion, marking a 1.7% decrease compared to last year. Despite the dip in revenue, the company saw a modest increase in retail used unit sales by 1.3%, and a marginal uptick in comparable store used unit sales by 0.1%. However, wholesale units experienced a 4.0% decline.

On a positive note, CarMax maintained solid margins in retail and wholesale operations. However, gross profits per unit for both sectors saw minor reductions from the previous year’s strong performance.
 

CarMax Falls Short of EPS and Revenue Expectations in Q4

The company’s buying activity also reflected the broader market’s volatility, with purchases from consumers and dealers down by 10.8% year-over-year. Specifically, vehicles bought from consumers decreased by 14.1%, while those acquired through dealers saw a significant rise of 44.8%.

CarMax Auto Finance (CAF) income provided a silver lining, growing by 18.9% from the prior year’s fourth quarter, buoyed by a lower provision for loan losses and an uptick in average managed receivables.

Despite these gains, net earnings per diluted share fell to $0.32 from $0.44 in the previous year, influenced by a normalization of the tax rate and the absence of profit-sharing revenues from extended protection plans (EPP) that benefited last year’s figures.

Analysts had anticipated an earnings per share (EPS) of $0.45 and revenue of $5.79 billion for the quarter. The actual results ($0.32 EPS, $5.6 billion in revenue) fell short of these projections, with the company posting lower-than-expected revenues and EPS.
 

CarMax Reaffirms Long-term Target of Selling more than 2 Million Combined Units by 2030

Looking ahead, CarMax provided guidance that reflects cautious optimism. The company plans to modestly accelerate the pace of its share repurchases, signaling confidence in its long-term financial health. Additionally, CarMax intends to expand its footprint by opening five new stores, alongside a second stand-alone reconditioning center and a stand-alone auction facility, with capital expenditures projected between $500 million and $550 million for fiscal 2025.

These investments are part of a broader strategy to use data science, automation, and AI to bolster the company’s omnichannel experience and operational efficiencies.

Moreover, CarMax reaffirmed its long-term financial targets, including selling more than 2 million combined retail and wholesale units annually by fiscal year 2030.

This ambitious goal and expectation of achieving a $33 billion annual revenue target sooner than anticipated demonstrates CarMax’s commitment to growth and market leadership. However, the company also acknowledged the ongoing volatility in vehicle values and market conditions, promising to update its progress and adjust its strategies accordingly.

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