CarMax, the used-car seller, topped analyst expectations for its latest quarterly earnings, largely thanks to cost savings.
The stock jumped 10% on Friday, making it the
S&P 500
‘s biggest gainer for the session and putting CarMax on pace for its largest percent increase since April 2020.
For its fiscal first quarter ended in May, CarMax (ticker: KMX) posted earnings of $1.44 per share, which included a one-off gain of 28 cents a share from a legal settlement, and trounced the Wall Street estimate for 79 cents a share. Excluding that benefit, earnings were $1.16 per share, compared with $1.56 in the year-ago quarter.
Revenue came in at $7.69 billion, down about 17% from the year-ago period, but beating Wall Street estimates for $7.49 billion. Comparable-store used-unit sales declined 11.4% in the period, an improvement from declines of 22.4% and 14.1% in the fiscal 2023 third and fourth quarters, respectively.
Cost savings helped lift the used-car seller’s results. Excluding the legal settlement benefit, selling, general and administrative expenses—which measure total costs—decreased 5.7% from the prior year’s quarter. SG&A has been falling year over year for the past two quarters, according to FactSet.
CarMax reduced costs in the quarter by pausing its share buybacks, lowering its staffing levels, cutting advertising spending, among other measures.
Like other auto sector companies, CarMax continues to deal with higher interest rates that have put off customers from buying vehicles at already elevated prices.
CEO William Nash, in a call discussing earnings on Friday, said “the overall used market obviously is still depressed,” although the market is starting to “go back to the old normal.”
Write to Karishma Vanjani at [email protected].
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