EDITOR'S NOTE: This story has been corrected. It originally incorrectly stated that CarMax Inc. purchased close to 40 percent of the consumer-owned vehicles it appraised. It should have said that close to 40 percent of the used vehicles in CarMax's retail inventory were purchased from consumers through its appraisal program.
DETROIT -- CarMax Inc.'s net income more than tripled in the quarter that ended May 31, as finance profits rebounded sharply and the retailer benefited from higher prices for the used vehicles that are its specialty.
Net earnings jumped to $101.1 million in its fiscal first quarter, from $28.7 million a year earlier. Revenue rose 23 percent to $2.26 billion.
The company's finance arm, CarMax Auto Finance, reported income of $57.5 million, compared with a loss of $21.6 million in the same period last year.
CarMax CFO Keith Browning said CarMax Finance benefited from lower charge-off rates, high loan recovery rates relative to historical norms, and historically high spreads between the rates charged to consumers and the finance company's funding costs.
CarMax sold 100,925 used cars and trucks in the quarter, up 9 percent. Used-vehicle sales at stores open for at least a year also rose 9 percent.
Amid strong used-vehicle prices, CarMax was able to buy more of its used-vehicle inventory from consumers, which typically is less expensive than buying from auctions.
In the latest quarter, close to 40 percent of the used vehicles in CarMax's retail inventory were purchased from consumers through its appraisal program. That is still below the more than half it purchased before the recession but above the 30 percent low point the company saw over the past two years, CarMax President Tom Folliard said.
CarMax has 103 used-car stores and five new-car dealerships in 49 markets.
Despite the gains in the quarter, floor traffic and sales are still below pre-recession levels, Folliard said. He said the high unemployment rate and concern about the economy are keeping many consumers out of the market.
"Consumers are still nervous about going out and signing up for a loan," Folliard told analysts during a conference call. "Almost everything we sell requires a loan. There is still a lot of uncertainty out there."