Updated 1:06 p.m. EST
Tough as it is for consumers to find affordable cars to buy, CarMax doubled its fiscal-third-quarter profit. And Wall Street likes the result.
The Richmond, Va.-based national used-car dealer reported that for the quarter ended Nov. 30, net income was 52 cents a share, compared with 24 cents in the year-earlier quarter.
Revenue fell 5.5% to $6.15 billion from $6.51 billion. Revenue from online transactions in the latest period, including retail and wholesale unit sales, was $1.9 billion, or 31% of net revenue. That’s up from 28% in the year-earlier period.
At last check CarMax (KMX) -) shares were 4.7% higher at $78.52. In 2023 through the close of trading Wednesday, the stock had risen 23%. Rival Carvana's (CVNA) -) shares have more than doubled since the end of October.
In fiscal Q3 the company sold 2.9% fewer cars at retail and 7.7% more cars at wholesale. Overall the company sold 1.3% more cars, a total of 302,666.
And CarMax's retail gross profit per sale was $2,277 per unit, in line with the year-earlier quarter. Similarly, gross profit per wholesale unit was $961, about flat with Q3 a year earlier.
CarMax Q3: 'vehicle affordability challenges'
Holding back sales are the things that have been widely reported among consumers. CarMax said that its Q3 was hurt by "vehicle affordability challenges." Specifically, "widespread inflationary pressures, higher interest rates, tightened lending standards and low consumer confidence" all hurt its third quarter.
On the buyside, CarMax purchased a total of 250,000 vehicles from consumers and dealers in fiscal Q3, up 5.1% from a year earlier. Of these it bought 228,000 from consumers, up 1.6%, and 22,000 through dealers, up 63%.
The company worked to control costs: Selling, general and administrative expense fell 5.4% to $560 million.
And CarMax resumed buying back shares in its Q3. It bought 648,500 common shares for nearly $42 million, an average of $64.76 each. At Nov. 30 the company still had $2.41 billion remaining on its repurchase authorization.
In the fiscal fourth quarter CarMax said it would open four stores in metro areas: two in New York and one each around Los Angeles and Chicago. And it plans to open its first stand-alone reconditioning center, in the Atlanta area.
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