CarMax Reports Decline in Fiscal Second-Quarter Revenue

Shares of CarMax (ticker: KMX) experienced a drop in premarket trading on Thursday following the release of their fiscal second-quarter revenue report. The used-car seller reported a significant decline in revenue compared to the same period last year.

Revenue Decline and Estimates

CarMax's revenue for the second quarter was $7.1 billion, representing a 13.1% decrease from the previous year. However, it slightly exceeded estimates of $7.02 billion, according to FactSet.

Drop in Used-Vehicle Unit Sales

Total retail used-vehicle unit sales fell by 7.4% compared to the year-earlier quarter, while comparable-store used-unit sales saw a decline of 9%.

Earnings Per Share

CarMax posted earnings of 75 cents per share, lower than the 79 cents reported in the year-ago quarter.

Factors Impacting Performance

In their earnings release, CarMax stated that they believe ongoing vehicle affordability challenges affected their unit sales performance for the second quarter. They cited widespread inflationary pressures, higher interest rates, tightened lending standards, and prolonged low consumer confidence as contributing factors.

Resumption of Share Repurchases

After pausing share repurchases in the previous fiscal year's third quarter, CarMax plans to reinitiate the practice in the upcoming third quarter.

Market Response

Shares of CarMax experienced a 12% decline to $70.36 in premarket trading on Thursday. However, it is worth noting that the stock has seen a 30% increase over the course of this year.