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Letter to the Editor

CarMax Plans to Open Used-Car Superstores in Two New Markets in the New Fiscal Year

RICHMOND, Va. -- CarMax Auto Superstores, Inc. has announced that, based on the improved sales and earnings achieved since late 1999 and the expectation of continued solidly profitable performance, the company plans to open a used-car superstore in each of two new markets late in the fiscal year ending February 28, 2002, and to increase the future expansion pace as the company's performance and management resources permit.

"For this fiscal year's first three quarters, ended November 30, 2000, CarMax delivered an after-tax return on sales of 2 percent, the highest of any publicly held automobile retailer," said W. Austin Ligon, president of CarMax. "The current earnings expectations of 40 to 42 cents per CarMax Group share for fiscal 2001, ending February 28, 2001, are approximately triple the 12 to 15 cents per share anticipated at the beginning of the fiscal year. We are sufficiently pleased with our performance and confident in our near- and longer-term outlook to restart moderate geographic expansion, concentrating over the next few years on single-store markets that serve one to two million households and satellite fill-in stores in our existing multi- store markets, including Chicago, Washington/Baltimore, Miami, Dallas and Houston. In the coming fiscal year, we will enter two single-store markets, one of which will be Sacramento, Calif. "We believe medium-sized markets and satellite fill-in stores provide us with the lowest risk, highest return growth opportunities in the near term," said Ligon. "The hub/satellite strategy initiated in our multi-store markets in 1998 has contributed to the sales and profitability increases we have experienced. Adding satellite fill-in stores allows us to extend the CarMax consumer offer into unserved trade areas in our existing metro markets while leveraging our operations and advertising in these markets.

"Beyond fiscal 2002, we expect to increase the expansion pace as our performance and management resources permit. We expect all of the expansion will be funded by CarMax," added Ligon. The company expects to open four to six stores, including satellites, in fiscal 2003.

CarMax is the nation's leading specialty retailer of used cars. With headquarters in Richmond, Va., the company operates 40 locations. CarMax operates 22 new-car franchises, most of which are integrated or co-located with its used-car superstores. CarMax is a subsidiary of Circuit City Stores, Inc.

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