CarMax, Inc. reported results for the second quarter ended Aug. 31, with total net revenues rising 19.5% to $7.9 billion.
Combined retail and wholesale unit sales of 387,735, an increase of 14.7%, while retail used unit sales increased 13.8% and comparable store used unit sales increased 13.0%; gross profit per retail used unit of $2,105 declined by $111, reflecting the continuation of pricing actions implemented to support an improved sales trend.
Wholesale units increased 15.9%; gross profit per wholesale unit of $858, a decrease of $135. CarMax reported Extended Protection Plans (EPP) margin per retail unit of $623, an increase of $46 per unit.
CarMax bought 310,107 vehicles from consumers and dealers, an increase of 5.9%. SG&A expenses increased 4.6% to $628.6 million, while leveraging robustly by $157, or 8.8%, per total unit. Ongoing cost reduction efforts were offset as the company annualized over materially reduced incentive-based compensation and by variable costs tied to strong unit growth.
CarMax Auto Finance (CAF) income increased 32.1% to $135.6 million. In regard to the continued execution of our full spectrum growth strategy, CAF financed 22% of Tier 2 volume versus 10% a year ago and was the largest lender in this space.
“Our strong second quarter results reflect solid execution and early progress against Shift into GEAR, our four-pillar strategy to strengthen CarMax’s core business and return the company to sustained growth,” said Keith Barr, president and chief executive officer. “We delivered 81% EPS growth as we strengthened our price competitiveness, increased Extended Protection Plan margins, expanded CAF’s share of Tier 2 originations, continued to enhance our digital experience, and drove material SG&A leverage. I am confident in our ability to build on this early momentum. We have a clear strategy, a solid foundation, and an exceptional team accelerating our progress to create long-term value for our shareholders.”
CarMax will host a Strategic Update virtually on November 3rd where details about our strategy for growth, key initiatives and milestones will be provided. Registration details will be available in the days ahead.
