CarMax shares slide despite record Q3 revenue

CarMax Inc (NYSE: KMX) on Wednesday said its revenue jumped to an all-time high in its fiscal third quarter. The stock still slid nearly 10% as shareholders focused on cash balance that was down significantly from last year and long-term debt that more than doubled.

Q3 financial performance

CarMax reported $269.4 million in net income that translates to $1.63 per share. In the same quarter last year, its net income was capped at $235.3 million or $1.42 per share. The largest U.S. retailer of used cars generated $8.528 billion in revenue that represents an annualised growth of 64%.

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According to FactSet, experts had forecast $1.45 of EPS on $7.378 billion in revenue. Income from CarMax Auto Finance (CAF) climbed by 5.9% in Q3.

On a year-over-year basis, unit sales were up 29.3% in the recent quarter. Retail used unit sales and wholesale unit sales were up 16.9% and 48.5%, respectively. Same-store used unit sales noted a 15.8% growth in Q3.

Vehicle purchase from consumers was also up 91% in the third quarter. CarMax spent more on technology and other measures to support higher demand in Q3. Combined with increased staffing, its quarterly SG&A costs jumped 33.7%.  

CEO Bill Nash’s remarks

In the earnings press release, CEO Bill Nash lauded record performance for the fiscal third quarter and said:

We are excited about the opportunities ahead of us and believe that by delivering the most customer-centric experience in the industry, we will enable sustainable growth and create meaningful long-term shareholder value.

CarMax spent $115.3 million on share buyback in Q3 and has another $876.2 million under the outstanding authorisation. KMX is up roughly 40% this year.