CarMax's Q2 net income rises 12%, revenue falls less than 1%

CarMax Inc. said Sept. 26 it recorded higher used-vehicle retail sales in its second fiscal quarter ended Aug. 31 when compared with the same time last year. Net income rose by double digits.

Net income: $132.8 million, up 12 percent from its second quarter a year ago.

Net revenue: $7.01 billion, down 0.85 percent from the same time last year.

Vehicle sales: 211,020 used retail vehicles, up 5.1 percent from Q2 2023; 141,458 wholesale vehicles, down 0.3 percent. Same-store used-vehicle retail sales rose 4.3 percent, CarMax said in its quarterly report issued Aug. 31.

Gross profit per vehicle: $2,269 per retail used vehicle, up $18 from a year ago; $975 per wholesale used vehicle, up $12.

"We grew retail used unit sales, delivered strong margins, continued to manage [selling, general and administrative expenses], and drove double-digit earnings growth while managing through industry wide auto loan loss pressure," CarMax CEO Bill Nash said in a statement. "Our diversified business model is well-positioned to drive future increases in sales and profitability as we further leverage our omni-channel capabilities."

Access to dealers

CarMax said it purchased 300,000 vehicles from consumers and dealers in the quarter, up 2.9 percent year over year. CarMax bought 269,000 vehicles from consumers, down 1.2 percent. With the help of its Edmunds team, it also bought 31,000 vehicles from dealers, up 61 percent, CarMax CEO Bill Nash said.

Nash told analysts Sept. 26 that MaxOffer, the company’s online appraisal tool for dealers, allowed it good access to dealers and their inventory in the quarter. 

"We've probably got 50 percent more dealers that are active on it than they were a year ago,” Nash said on the company’s second-quarter earnings call. “And when it comes to, for example, leases, that's never been a significant part of our sales. But the interesting thing is, with our [instant offer] and MaxOffer, we actually have better access to them than we did historically, even though the volume is down. For us, the supply just hasn't been an issue.”

Fifteen percent of CarMax’s retail used-vehicle sales in the first quarter were online, up 1 percent year over year.

CarMax considers sales “online” when a customer completes all four steps of a transaction remotely: reserving a vehicle; financing it; trading in a vehicle or opting out of a trade-in; and creating a remote sales order.

Shares of CarMax were up 5 percent to $78.21 at the market close Sept. 26.