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Used car retailer Carmax (KMX) reported earnings Tuesday morning and it got double whammied by inflation. Used car sales units declined 15% compared to the previous quarter and 28% from the peak in 2Q21. This is likely a function of higher-priced used cars pricing consumers out as well as KMX’s difficulty in acquiring inventory due to the tight auto supply chain.

While those factors affected KMX’s top line, inflation also ate away at its margins. Gross margin slipped to 9.2% compared to 12.0% at its peak in 2Q21. The operating margin was 1.2% compared to 4.8% in 2Q21. As a result, diluted EPS fell to 98 cents from $1.63 a quarter ago and $2.63 in 2Q21 – declines of 40% and 63%, respectively.

KMX shares are down only 4% premarket but that’s more a reflection of the fact that its stock has already been hammered than the quality of the quarter. This early read on inflation’s impact on 1Q22 corporate earnings suggests it is nasty.