CarMax will step up store-opening pace
Fiscal Q4 net jumps 44 percent
CarMax Inc. said will open 13 to 16 new used-only stores each of the next three fiscal years, starting with the one that began March 1.
That is up from the 10 to 15 used-only stores a year it has opened since the recession.
The additions come as CarMax closes in on annual sales of 1 million vehicles, counting new, used, wholesale and retail units.
The nation’s largest used-vehicle retailer already has opened two stores since March 1. One was in Minneapolis and the other in Sicklerville, N.J., outside Philadelphia.
“In addition to these two, we plan to open 12 more in fiscal ’16, plus the relocation of our store in Rockville, Md.,” CEO Tom Folliard told analysts and reporters today during a conference call outlining CarMax’s latest quarterly earnings.
“Sometimes one or two will slip in or out of a year, so we like to put a range around it, but we don’t plan on opening 10 anymore,” he said. The 13 to 16 target is “the range we think we can deliver over the next few years.”
Folliard said the company has added 50 stores since 2011. Not counting its two most recent stores, CarMax closed its fiscal year on Feb. 28 with 144 stores.
Those stores sold 967,335 vehicles, wholesale and retail, up 10 percent from a year earlier.
Of those sales, used retail vehicles rose 11 percent to 582,282, new retail vehicles grew 14 percent to 8,867, and used wholesale vehicles grew 9.8 percent to 376,186.
In the fiscal fourth quarter that ended Feb. 28, CarMax’s net earnings surged 44 percent to $143.1 million, as net sales and operating revenues rose 14 percent to $3.51 billion. Used-vehicle retail sales rose 12 percent to 149,271, while new-vehicle sales fell 7 percent to 1,680. Revenues from used-vehicle retail sales rose 13 percent to $2.9 billion.
For the full fiscal year, net profit jumped 21 percent to $597.4 million, and net sales and operating revenues climbed 13 percent to $14.27 billion.
Folliard also said the company will remodel 17 stores this year and relocate its Rockville, Md., store.
He said the remodeled stores will incorporate some of the technology that CarMax developed for its next-generation stores, such as touch screens inside the store and at kiosks on its lot.
The company also is converting stores with cubicles and offices to have more open floor space.
Folliard said the company always has updated it stores, but these remodeling projects are a bit more expensive, which is why he highlighted them in his presentation.
“It doesn’t change much operationally, but I think it provides a better experience for our customers and a better working environment for our associates as well,” he said. “We’ve been pleased with what we’ve done so far, and we’ll gauge the results going forward and see how much more aggressively we want to spend.”
He said the Rockville store was originally built as a “copycat” by a competitor and was successful but is “undersized.” Its lease is expiring, he added, which gives it the opportunity to relocate “a short distance away to a much bigger facility.”
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