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Letter to the Editor
Wednesday December 21
CarMax 3Q Profit Climbs 46 Percent on Higher Sales
Used-car chain CarMax Inc. has reported that profit jumped 46 percent in its fiscal third quarter on strong customer traffic and slightly higher selling prices.For the three months ended Nov. 30, CarMax earned $26.4 million, or 25 cents per share, up from $18 million, or 17 cents per share, a year ago. Excluding a boost from certain auto financing plans, CarMax said it would have earned 22 cents per share.
Revenue increased 17 percent to $1.42 billion from $1.22 billion. CarMax said customer traffic was up at its stores and said that it saw a slight benefit from recent hurricanes, as evacuees bought cars to replace those lost to the storms.
Analysts expected earnings of 21 cents per share on sales of $1.4 billion, according to a Thomson Financial poll.
Sales at locations open at least a year rose three percent as did sales of used vehicles at these locations. New cars, a much smaller part of CarMax's revenue, posted a six percent decline in unit sales. CarMax said new car sales dropped sharply after the end of employee-pricing incentives by automakers.
Wholesale sales rose noticeably, helped by higher prices, strong appraisal business and geographic expansion, CarMax said.
The company's average selling price for used vehicles grew to $16,147 from $15,591 in the third quarter of 2004.
For the fourth quarter, CarMax predicted earnings of 25 cents to 31 cents per share. The company said its used vehicle sales at existing stores could range from a four percent drop to two percent growth. That forecast would mean full-year earnings of $1.27 to $1.33 per share.
Analysts expect fourth-quarter profit of 30 cents per share and year-end earnings of $1.27 per share.
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