CarMax Reports Q4 and FY’2025 Results, Falls Short on Earnings

CarMax, Inc. (KMX) reported its performance in the fourth quarter of fiscal year 2025, achieving over 80% growth in earnings. The company’s net revenues reached $6.0 billion, marking a 6.7% increase from the previous year. This growth was driven by a 6.2% rise in retail used unit sales and a 5.1% increase in comparable store used unit sales. Wholesale units also saw a 3.1% uptick.

The company’s total gross profit climbed to $667.9 million, a 13.9% increase, bolstered by strong unit volume and margin performance. Notably, the gross profit per retail used unit hit a record $2,322, while the gross profit per wholesale unit remained historically strong at $1,045. Additionally, CarMax’s Extended Protection Plans (EPP) margin per retail unit rose to $580, reflecting a $10 increase per unit.

CarMax’s proactive approach in acquiring vehicles also paid off, with a 15.3% increase in purchases from consumers and dealers. The company bought 269,000 vehicles, including 223,000 from consumers and 46,000 through dealers. These strategic moves, combined with ongoing cost management efforts, helped CarMax leverage its selling, general, and administrative expenses effectively, resulting in a 5.1% increase to $610.5 million.

CarMax Reports Q4 with Revenue Higher than Expected, Falls Short on Earnings Expectations

Comparing CarMax’s fourth-quarter performance against market expectations reveals a positive outcome. The company’s earnings per diluted share (EPS) were $0.58, a significant 81.3% increase from the previous year’s $0.32. This figure, however, fell short of the market expectation of $0.647. Despite this, CarMax’s net revenues of $6.0 billion exceeded the anticipated $5.93 billion, showcasing the company’s ability to generate higher revenue than expected.

The robust growth in retail used vehicle sales, which increased by 7.5% compared to the previous year, was a key driver of this revenue surge. Wholesale vehicle revenues also saw a 3.5% increase, contributing to the overall growth. CarMax’s ability to maintain a steady market share of 3.7% in the nationwide age 0-10 year old used vehicle market further underscores its strong market position.

Additionally, CarMax Auto Finance (CAF) income rose by 8.2% to $159.3 million, driven by growth in net interest margin percentage. Although the company’s provision for loan losses decreased slightly to $68.3 million, the allowance for loan losses as a percentage of ending managed receivables improved to 2.61%. These financial metrics highlight CarMax’s effective financial management and its ability to navigate market challenges.

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CarMax Plans to Expand its Store Network in FY’26

The company plans to expand its store network with six new locations and four stand-alone reconditioning/auction centers in fiscal year 2026. This expansion is part of CarMax’s strategy to enhance its market presence and cater to a broader customer base. The company has allocated approximately $575 million for capital expenditures in fiscal 2026, reflecting a year-over-year increase driven by land purchase timings.

CarMax aims to achieve ongoing growth in retail and wholesale unit sales and market share, with a focus on double-digit EPS growth in the coming years. The company’s earnings growth model is designed to deliver a high-teens CAGR in EPS when retail unit growth is in the mid-single digits. This strategic approach positions CarMax to capitalize on market opportunities and drive sustainable growth.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.