Despite weaker sales than it expected, CarMax Inc. posted a double-digit increase in profits in its first quarter.
CarMax CEO Austin Ligon says the retailer of used vehicles lost sales momentum in April. Its sales weakened further in May, he adds.
CarMax's 2006 first fiscal quarter ended May 31.
Ligon cites volatile wholesale vehicle prices and higher gasoline prices.
Still, CarMax's net earnings grew by 13 percent in the first quarter over the year-ago period. The company reported quarterly earnings of $39.8 million, or 37 cents a share.
Vehicle sales at CarMax stores that were open for at least a year grew 6 percent during the quarter over the year-ago period.
The Glen Allen, Va., company previously predicted quarterly growth of 9 percent to 12 percent in such sales.
CarMax projects second-quarter earnings of 29 cents to 34 cents a share. The company forecasts an increase of 3 percent to 9 percent in vehicle sales at its stores open for at least a year.
"These ranges are wider than we usually forecast," Ligon told analysts during a conference call. "They reflect the difficulty of forecasting in the current uncertain market environment."
During its first quarter, CarMax's total sales increased by 19 percent over the year-ago quarter, to $1.58 billion.
Overall, CarMax sold 74,143 used vehicles in the quarter. That was an 18.9 percent increase over the first quarter of 2004.
Ligon says wholesale prices of used vehicles typically are flat or down in the spring.
But this spring, he says, the average wholesale price of the vehicles CarMax bought increased by about $500 over spring 2004.
CarMax opened four used-vehicle stores in its first quarter.
The company plans to open five more by year end.
CarMax operates 62 used-car superstores and seven new-car franchises in 28 U.S. markets.
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