Your Source for Up-To-Date News and Research on the Collision Repair Industry 

 

click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email

SUBSCRIBERS-ONLY
Today's News
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor

Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide

Management/
Technical Info
Market Watch Rates
INSIGHT Inside this month's issue...

Feedback
Letter to the Editor

CarMax Cuts Full-Year Outlook Despite Higher Q2 Earnings

"Our sales and profits for the first half of the fiscal year fell short of our original expectations," Chief Executive Tom Folliard said in a statement. "We believe this is largely the result of the current market environment and the industry-wide slowdown in auto sales. Our revisions assume that the current trends will continue for the remainder of the fiscal year," he added.

Net income in the second quarter rose about 20 percent to $65 million, or 29 cents a share, from $54.3 million, or 25 cents a share, a year ago. Analysts on average expected 29 cents. Sales in the quarter ended August 31 rose ten percent to $2.12 billion, short of the $2.19 billion Wall Street had expected. However, sales of used vehicles at stores open at least a year, a key retail measure, increased three percent for the quarter. That was slower than the six percent growth rate in the first quarter.

Used-vehicle unit sales were up 11 percent in the quarter, while new-vehicle unit sales fell 15 percent due to the tough sales environment and the August sale of a new-car dealership in Orlando, Florida. Wholesale unit sales rose 15 percent. The average selling price for its used vehicles was $17,388, off slightly from the $17,399 in the year-earlier quarter.

For the year ending February 29, 2008, the Richmond, Virginia-based company now expects earnings in the range of 92 to 98 cents a share, down from its prior forecast range of $1.03 to $1.14 a share. Analysts were expecting $1.06. CarMax also cut its outlook for growth in used vehicle sales at stores open at least a year to a range of one to three percent. It previously had forecast growth in the range of three to nine percent. In the 2007 fiscal year, CarMax had growth of nine percent.

CarMax based its adjusted outlook on the weaker-than-expected financial results in the first half of the year, expected slower growth in used-vehicle sales, continued spending on operational and Internet initiatives, and higher credit spreads that will hurt third-quarter funding costs by about $4 million.

The company plans to open nine used-car stores in the second half of the fiscal year, bringing the total for the year to 13, an increase of 17 percent. For the first half of fiscal 2009, it plans to open eight more used-car stores.

©2007 Collision Repair Industry INSIGHT
All Rights Reserved

FEATURED
LINKS:

INSIGHT Supports the NABC!
Do You?