Takeaways
- CarMax& Profit fell short of expectations as demand for used vehicles fell and the company spent more to cover possible loan losses. li>
- Retail, same-store and wholesale unit sales all declined in the quarter.
- Revenue at the company's financial unit plunged because it has made higher provisions for doubtful debts.
CarMax (KMX) shares fell more than 9% in early trading Thursday after reporting lower-than-expected profit as demand for used vehicles slowed and the company spent more to cover potential losses due to bad loans.
The largest seller of used vehicles reported second-quarter fiscal 2024 earnings per share (EPS) of $0.75, down $0.04 from a year ago. a year and below analysts' estimates. Revenue fell 13.1% to $7.1 billion, although that was better than expected.
Sales of Retail used units decreased 7.4%, same-store used unit sales decreased 9% and wholesale unit sales decreased 11.2%. .
Finance unit income the company sank 26.2% to $135 million. CarMax explained that the decline was due to “net interest margin percentage compression and higher provision for loan losses.”
CEO Bill Nash said CarMax continues to generate sequential improvements. in its business “despite persistent and widespread pressures in the used car industry”.
The company noted that It had suspended the sharing of repurchases during the quarter under review but intends to relaunch them during the current quarter. At the end of August, it had $2.45 billion remaining in its share buyback authorization plan.
CarMax shares plunged to their lowest level since May following the news.
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Source: investopedia.com