In a statement, CarMax said about one-third of the job cuts are being made in response to the company’s 78 percent second-quarter profit decrease from the same quarter last year. CarMax reported those results Sept. 22.
The rest of the cuts come from attempts to streamline the process of reconditioning used cars for resale. Most of the company’s 98 stores will see job cuts, CarMax said.
“Since Memorial Day, we have taken significant steps forward in aligning our costs with current sales levels,” CarMax CEO Tom Folliard said in a statement. “We have achieved our store staffing objectives in most departments, but it was necessary to make further reductions in service operations in order to reach these staffing goals.”
During the second quarter that ended Aug. 31, CarMax had reduced companywide inventory by 13,300 units, or more than $200 million, cut some jobs and reduced some workers’ hours to try to match costs with low sales levels. Still, the retailer posted $14.0 million in second-quarter net income, down from $65.0 million in the year-ago quarter.
Severance pay for the upcoming job cuts will cost the company $7 million, which CarMax will include in its costs for the third quarter, which ends Nov. 30.
CarMax sold 337,021 used vehicles in the 12 months ending Nov. 30, 2007. The group also ranks No. 28 on the Automotive News list of top 125 new-car dealership groups in the United States, with 18,563 new vehicles sold during the same period.