Used-vehicle retail giant CarMax Inc. said Thursday it sold fewer used vehicles in its second fiscal quarter as ongoing financial pressures affecting retailers in the used-vehicle market stuck around.
CarMax reported a slimmed net income of $125.9 million in the quarter ended Aug. 31, down 56 percent year-over-year. The company’s net revenue in the quarter was $8.1 billion, up 2 percent from the year-earlier period.
It retailed a total of 216,939 used vehicles in the quarter, down 6.4 percent from the year-earlier period. Comparable store used-vehicle sales fell 8.3 percent. CarMax said vehicle affordability challenges in the period stemmed from more inflationary pressures, climbing interest rates and low consumer confidence, conditions which also beset the retailer in its first quarter.
The company said it bought 342,731 vehicles from consumers and dealers, down 8.1 percent year-over-year. It said 322,543 of those vehicles were purchased from consumers, down 11.5 percent year-over-year. However, 20,188 vehicles were obtained through MaxOffer, the company’s digital appraisal tool for dealers. That’s up 130.4 percent year-over-year and up 18 percent compared with the first quarter.
The company opened three new locations in Stockton, Calif., Wayne, N.J. and East Meadow, N.Y., in the quarter, part of its plan to open 10 new locations in the U.S. in fiscal 2023.
“While this was a challenging quarter across the used car industry, our ongoing progress in strengthening and expanding our omnichannel experience continues to positively differentiate us and enable us to grow market share,” CarMax CEO Bill Nash said in a statement. “As we navigate the near-term pressures facing our industry, we are further sharpening our focus on driving additional operational efficiencies across our business.”
The results sparked a steep selloff in CarMax shares, and weighed heavily on the stocks of its peers, as well as auto manufacturers and suppliers. CarMax was down as much as 24 percent in mid day trading, as was Carvana Co., while Sonic Automotive Inc. tumbled 16 percent.
CarMax closed down 24.6 percent to $65.16 in Thursday trading.
Results from the company’s earnings report include:
Q2 net earnings: $125.9 million, compared with $285.3 million a year earlier.
Q2 net revenue: $8.1 billion, up 2 percent from a year earlier.
Q2 used-retail vehicles sold: 216,939, down 6.4 percent from 231,797 a year earlier.
CarMax ranks No. 1 on Automotive News’ list of the top 100 retailers ranked by used-vehicle sales, with retail sales of 924,338 used vehicles in 2021.
Bloomberg contributed to this report.