CarMax Reports Record Fourth Quarter and Fiscal 2003 Sales
RICHMOND, Va., March 6 -- CarMax, Inc. today reported record sales for the fourth quarter and fiscal year ended February 28, 2003.
* For the quarter, total sales rose 11 percent to $946.5 million from
$855.1 million in the fourth quarter last year.
* For the year, total sales rose 12 percent to $3.97 billion from $3.53
billion in the prior fiscal year.
* For the quarter, comparable store used unit sales were flat compared to
the prior year's fourth quarter; for the year, comparable store used
unit sales increased 8 percent.
* CarMax expects fourth quarter earnings per share to be approximately 17
cents to 18 cents.
Sales Commentary
"We are very pleased with our 12 percent sales growth for the year, including our comp store used unit sales growth of 8 percent, especially compared against the extraordinarily strong sales performance we delivered in fiscal 2002," said Austin Ligon, president and chief executive officer of CarMax. "Our strong comp used unit sales represent approximately a 16 percentage point spread versus an estimated aggregate 8 percent negative used unit comp reported in calendar 2002 by the publicly traded new car retailers. This spread illustrates the effectiveness of the unique CarMax consumer offer in continuing to drive significant market share gains. Our strong used unit comps also came against very tough comparisons from fiscal 2002, where we recorded 24 percent used unit comps.
"During the fourth quarter, we were particularly pleased that our newly opened stores continued to perform significantly above plan. We were also pleased with the continuing strong execution of our comparable used car stores, though we were disappointed with the weather-affected used unit comp results. During the fourth quarters of our previous two fiscal years, we experienced relatively mild winters and few sales interruptions of consequence," said Ligon. "This year, however, winter returned with a vengeance.
"In December and January, we saw a moderately adverse weather effect on sales; going into February, we believed that we would deliver quarterly used unit comp growth at the low end of the 4 percent to 7 percent range we had forecast.
"However, heavy snow and ice in February disrupted store sales throughout the mid-Atlantic, the mid-South and Texas affecting sales in 10 of the 15 markets in which we operate comp stores," Ligon said. Some stores were affected three of the four weekends in February, including the three-day President's Day holiday. Hit particularly hard were our markets in Maryland, Virginia and North Carolina, where seven of our oldest and highest volume comp stores are located.
"We estimate that the harsh weather conditions we experienced during the quarter cost us roughly 3 to 4 percentage points in comp used unit sales growth," said Ligon. "Also in the fourth quarter, we began to experience consistently lower approval rates by two of our non-prime, third-party lenders that we believe cost us approximately 1 to 2 percentage points in expected used comp unit growth. Total sales in the quarter grew as a result of the strong performance of our new used car superstores and growth at our new car franchises."
Earnings Expectations
"The above-plan performance of our new stores and the strength of our finance operation will help us deliver earnings per share for the quarter of approximately 17 cents to 18 cents," said Ligon, "substantially offsetting the negative effect on earnings of our comp used unit shortfall." CarMax's prior expectation for fourth quarter earnings per share was approximately 18 cents to 20 cents.
"When we release our year-end earnings results on March 31, we will have finalized our budget and will be able to give our used comp sales growth and our earnings expectations for fiscal 2004," Ligon said. "Although we, like everyone, are concerned about the uncertainty in the current economic and political environment, we believe that our sales for the coming year will most likely be consistent with our longer term expectations of 5 percent to 9 percent used unit comp growth."
Store Openings
During the fourth quarter, CarMax opened two satellite superstores, one in Oak Lawn in the Chicago market and one in Lithia Springs in the Atlanta market. Store openings in fiscal 2003 totaled five, which also included a superstore in each of the Sacramento and Knoxville markets, as well as a satellite superstore in Charlotte. The sixth store in our fiscal 2003 plan is the Las Vegas superstore, which was originally slated to open late in fiscal 2003; it will open on March 12.
During fiscal 2004, we plan to add 7 or 8 superstores. Currently scheduled are standard superstores in the mid-sized markets of Kansas City in April, Birmingham in the second quarter, and Memphis and Louisville in the third quarter. Fill-in superstores are planned for Orlando during the second quarter and Chicago and Las Vegas during the third quarter. If we open an eighth store, the opening will be in our fourth quarter.
CarMax also announced today that it plans to sell its five Mitsubishi new car franchises. "Mitsubishi has been a great partner with an attractive product," said Ligon. "However, our used car sales volumes have increased substantially in the stores where we operate our five integrated Mitsubishi franchises, and we need the space to permit used car sales expansion, which is more profitable." CarMax operates the Mitsubishi franchises in used car superstores located in its Atlanta, Chicago, Nashville and Washington, D.C./Baltimore markets.
Fourth quarter and year-end earnings will be released on Monday, March 31, 2003, before the market opens. CarMax will host a conference call today, March 6, as well as on March 31, 2003.
CONFERENCE CALL INFORMATION
Sales Conference Call, March 6, 2003. Today's conference call for investors will begin at 10:00 a.m. Eastern. Domestic investors may access the call at 1-888-810-3139 and international investors at 1-630-395-0357. The pass code for the call is "CarMax." A live Web cast of the call will be available on the company's investor information home page at http://investor.carmax.com/ or at http://www.streetevents.com/ . A replay of the call will be available beginning at approximately 2:00 p.m. Eastern today, March 6, and will run through 5:00 p.m. Eastern on March 13, 2003. Domestic investors may access the recording at 1-800-873-2140 and international investors at 1-402-220-4756. No pass code is required. A replay of the call also will be available on the CarMax investor information home page or at http://www.streetevents.com/ .
Earnings Conference Call, March 31, 2003. The conference call for investors to be held in conjunction with the release of fourth quarter and full year earnings will begin at 10:00 a.m. Eastern on Monday, March 31. Domestic investors may access the call at 1-888-810-3139 and international investors at 1-630-395-0357. The pass code for the call is "CarMax." A live Web cast of the call will be available on the company's investor information home page at http://investor.carmax.com/ or at http://www.streetevents.com/ . A replay of the call will be available beginning at approximately 2:00 p.m. Eastern on March 31 and will run through 5:00 p.m. Eastern on April 7, 2003. Domestic investors may access the recording at 1-888-568-0159 and international investors at 1-402-530-7823. No pass code is required. A replay of the call also will be available on the CarMax investor information home page or at http://www.streetevents.com/ .
Comparable Store Sales Change
Three Months Ended Fiscal Year Ended
February 28 February 28
2003 2002 2003 2002
Vehicle units:
Used vehicles 0 % 23 % 8 % 24 %
New vehicles 3 % 11 % (3)% 21 %
Total 0 % 22 % 6 % 23 %
Vehicle dollars:
Used vehicles (1)% 25 % 8 % 30 %
New vehicles 3 % 12 % (3)% 24 %
Total 0 % 23 % 6 % 28 %
Percent Vehicle Sales by Category
Three Months Ended Fiscal Year Ended
February 28 February 28
2003 2002 2003 2002
Vehicle units:
Used vehicles 90 % 89 % 89 % 87 %
New vehicles 10 11 11 13
Total 100 % 100 % 100 % 100 %
Vehicle dollars:
Used vehicles 86 % 85 % 85 % 82 %
New vehicles 14 15 15 18
Total 100 % 100 % 100 % 100 %
Unit Sales by Category
Three Months Ended Fiscal Year Ended
February 28 February 28
2003 2002 2003 2002
Used vehicles 46,700 41,800 190,100 164,000
New vehicles 5,100 5,000 22,400 24,200
Total 51,800 46,800 212,500 188,200
Average Retails
Three Months Ended Fiscal Year Ended
February 28 February 28
2003 2002 2003 2002
Used vehicles $14,900 $15,000 $15,200 $15,100
New vehicles $23,100 $23,100 $23,200 $23,100
Weighted average $15,700 $15,800 $16,100 $16,200
CarMax is the nation's leading specialty retailer of used cars. With headquarters in Richmond, Va., CarMax operates 40 used car superstores in 18 markets. CarMax also operates 17 new car franchises, 15 of which are integrated or co-located with its used car superstores. During the fiscal year ended February 28, 2003, the company sold 190,100 used vehicles, which is 89 percent of the total 212,500 vehicles the company sold during the year. For more information, access the CarMax Web site at http://www.carmax.com/ .
This release contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations. These risk factors are set forth in more detail in the CarMax, Inc. SEC filings.
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