CarMax Inc. earnings surged 21 percent in its fiscal first quarter on a bump in used-vehicle sales driven by a delay in consumers' federal income tax refunds which pushed sales into the latest quarter.
The largest U.S. used-vehicle retailer posted net profit of $211.7 million in the quarter ended May 31, as revenue rose 10 percent from the year-earlier quarter to $4.5 billion.
The company retailed 195,273 used vehicles in the quarter, a gain of 14 percent. On a same-store basis, used-vehicle sales rose 8.2 percent.
CarMax "benefited somewhat from the delay of federal income tax refunds in February, which shifted some sales from the fourth quarter of last [fiscal] year into this year's first quarter," the company said in a statement . It also credited its sales gains to "strong execution" by employees at its physical stores, as well as digital sales initiatives.
Sales to customers with low credit scores, or Tier 3 customers as CarMax puts it, fell to 10 percent of total used-vehicle sales, compared with 11.2 percent a year earlier. The drop was due to an unnamed third-party lender tightening its credit over the past year, CarMax said.