CarMax posts record Q2 revenue in ultra-competitive used-vehicle market

CarMax posted record net revenue in its fiscal second quarter on a double-digit increase in vehicle sales, while net earnings dipped.

The largest used-vehicle retailer in the U.S. pointed to its omnichannel retail efforts, and in particular its instant cash-offer tool, as having driven its top-line success in the period, ended Aug. 31.

Net revenue climbed 49 percent to $8 billion in the quarter. Total vehicle sales grew 20 percent to 419,895, and included retail used-vehicle sales of 231,797, up 6.7 percent, and record wholesale sales of 188,098, up 41 percent. Same-store retail used-vehicle sales rose 6.2 percent.

In an auto retail market where demand is fierce and inventory often tight, CarMax bought 364,263 vehicles from consumers in its second quarter. That was a 59 percent increase over the year-earlier period. About 188,000 of the vehicles were bought through the company's instant appraisal and cash-offer tool, which the company launched as a joint effort with vehicle listings service Edmunds. CarMax acquired Edmunds this year.

CarMax's omnichannel efforts have involved a reorganization of the retailer around a focus on seamless online and in-person vehicle shopping. Omnichannel retail refers to the ability to shop for items across multiple electronic devices or in person, while having the experience personalized and consistent. CarMax completed the rollout of its omnichannel retail experience during the year-earlier quarter.

In a release Thursday, CEO Bill Nash singled out the omnichannel platform, saying it drove performance across the business and led to the record wholesale sales.

"Of particular note is the performance of our online instant appraisal offering, which continues to exceed our expectations," Nash added. "Just six months after the nationwide launch, we have already purchased over 350,000 cars from consumers online with this digital product."

In its second quarter, CarMax's gross profit rose 8.4 percent to $815.5 million. Retail used-vehicle gross profit per vehicle was $2,185, down from $2,214 in the year-earlier quarter.

Net earnings fell 3.9 percent to $285.3 million. The dip was primarily the result of a comparison with year-earlier cost savings realized during the COVID-19 pandemic, the company said.

CarMax shares fell 13 percent to close at $127.96 on Thursday as some of the results did not meet analysts' projections.