CarMax Q1 Revenue +6.2% to $8.01B; EPS Beats but Margins Weaken
KMX•CarMax’s Q1 revenues rose 6.2% to $8.01 billion with EPS of $1.31, surpassing consensus forecasts of $7.42 billion and $0.95. Gross profit declined 4.4% to $854.4 million as per-unit margins dipped $230 to $2,177, while wholesale sales climbed 8.4% and financing penetration expanded 150 bps to 43.3%.
1. Q1 Financial Results
CarMax reported net revenues of $8.01 billion, a 6.2% increase year-over-year. Net earnings per diluted share were $1.31 versus $1.38 a year ago, topping analyst estimates. Gross profit fell 4.4% to $854.4 million and comparable-store used vehicle sales slipped 0.8%.
2. Wholesale and Finance Performance
Wholesale unit sales rose 8.4% to 162,064 units, driving an 8.3% increase in wholesale gross profit. The CarMax Auto Finance unit generated $140.2 million in income, down 1%, while financing penetration climbed 150 basis points to 43.3% of units sold.
3. Cost Savings and Strategy
SG&A expenses declined 3.7% to $635.2 million, supporting a goal of $200 million in exit-rate SG&A savings by fiscal 2027 year-end. New CEO Keith Barr laid out a four-pillar growth strategy focusing on competitive pricing, integrated digital and in-store experiences, expanded finance and protection products, and efficiency gains through technology.
4. Market Reaction and Capital Return
Shares fell 9% following the earnings release, trimming a year-to-date gain of roughly 25%. No shares were repurchased during the quarter, leaving $1.31 billion available under the existing buyback authorization.
