CarMax Inc.'s profits rose in the quarter ended May 31 largely because of a lower income tax rate, the nation's largest used-car retailer said Friday.
Net income for the Richmond, Va., company jumped 12.7 percent to $238.7 million in its fiscal first quarter, while net sales and operating revenue rose 5.5 percent to $4.79 billion from the year-earlier period.
CarMax shares surged on the news, rising 12.9 percent to close the day at $80.19.
New store locations helped CarMax increase total vehicle sales for the quarter by 1.6 percent to 198,398 units. But same-store used-vehicle sales fell 2.3 percent because of lower store traffic and a tough comparison against a strong year-earlier period, the company said.
"While our comparable store unit sales performance improved significantly from the February 2018 quarter, we believe macro pricing factors still had some effect on our first quarter sales," CarMax CEO Bill Nash said in a statement.
During its first quarter, CarMax opened three stores, adding one store each in the Dallas and Miami markets and entering the Greenville, N.C., market. This month it opened a store in the Santa Fe, N.M., market, its second in that area. CarMax now has 192 stores in 41 states.
That growing store count was a contributor to a 9.6 percent jump in total wholesale vehicle sales during the quarter, to 113,335 vehicles. A higher appraisal buy rate was another factor in that increase.
CarMax's average used vehicle sales price rose 3 percent to $20,067.
CarMax plans to add two new stores in its second quarter, Nash told analysts on a conference call. One will be in a new market, the Macon, Ga. area, while the other will be in an existing market of Oklahoma City, Okla.
Nash told analysts that while many of the stores it plans to open in its 2019 fiscal year are in smaller metro markets, that’s mostly related to where it has property. He said there are “a lot” of large markets where CarMax can continue to add more locations.
“You’ll see us still opening up stores in larger markets,” Nash said.
CarMax tops the Automotive News' list of the top 100 dealership groups based in the U.S., ranked by used-vehicle retail sales. With sales of 671,294 used vehicles in 2017, CarMax more than doubled the used volume of runner-up Penske Automotive Group Inc.