CarMax Reports Second Quarter Sales
RICHMOND, Va., Sept. 8 -- CarMax, Inc. today reported sales for the second quarter ended August 31, 2004.
* Total sales rose 7% to $1.32 billion from $1.24 billion in the same
period last year.
* Total used unit sales rose 4% for the quarter.
* Comparable store used unit sales declined 7% for the quarter.
* The company now expects second quarter earnings of approximately 27
cents per share.
Sales Commentary
"We continue to be reassured by the fact that our stores are executing well in a difficult sales environment," said Austin Ligon, president and chief executive officer. "The sales volatility and weakness that we experienced in June and July, and especially in early August, continued through the end of the quarter. August results also suffered from the effects of tropical storms on our Florida and mid-Atlantic stores. Nonetheless, we remain confident that our superior consumer offer is allowing us to maintain or gain used car market share."
Addition of Subprime Finance Provider
During the second quarter, CarMax added a new third-party finance provider focused on subprime customers, Drive Financial Services. Drive was rolled out to CarMax's entire used car superstore base during the first half of August, following more than nine months of testing in selected stores. At CarMax, customers who have been turned down by all of the other in-store finance providers may qualify for Drive financing. Drive offers financing to customers within carefully constructed parameters, including vehicle price, year, make, and mileage; payment-to-income ratios; and minimum down payments. As is customary in the subprime finance industry, Drive purchases the loan contracts at a discount.
For the second quarter, used car sales financed by Drive had a modest effect on overall sales, given the timing of the rollout. "We believe Drive represents an opportunity to provide us incremental sales and some incremental profit," said Ligon. "It is still too early to determine the ultimate incremental sales that may be provided by Drive, given the time required to build consumer awareness of this new financing opportunity."
Second Quarter Earnings Expectations
"For the second quarter, we now expect earnings per share of approximately 27 cents," Ligon said. "We plan to offer guidance for our third quarter when we release our second quarter earnings report on September 20."
Store Openings
CarMax opened three superstores during the second quarter, entering the Austin, Tex., market with a standard superstore and adding satellite superstores in Winston-Salem, N.C., in the Greensboro market, and in Fayetteville, N.C., in the Raleigh market. The company has opened six superstores thus far in fiscal 2005 and now plans to add three superstores during the second half of the fiscal year. The satellite superstore in Ontario in the Los Angeles market that had been scheduled to open at the end of the fiscal year is now scheduled to open early in March 2005.
Retail Vehicle Sales Changes
Three Months Ended Six Months Ended
August 31 August 31
2004 2003 2004 2003
Comparable store vehicle
sales:
Used vehicle units (7)% 6 % (5)% 8 %
New vehicle units 13 % (9)% 12 % (4)%
Total vehicle units (5)% 4 % (3)% 7 %
Used vehicle dollars (6)% 7 % (3)% 8 %
New vehicle dollars 13 % (8)% 12 % (3)%
Total vehicle dollars (4)% 5 % (1)% 6 %
Total vehicle sales:
Used vehicle units 4 % 18 % 6 % 20 %
New vehicle units (1)% (10)% (1)% (4)%
Total vehicle units 3 % 15 % 5 % 18 %
Used vehicle dollars 5 % 20 % 8 % 20 %
New vehicle dollars (1)% (8)% (1)% (3)%
Total vehicle dollars 4 % 15 % 7 % 16 %
Retail Vehicle Sales Mix
Three Months Ended Six Months Ended
August 31 August 31
2004 2003 2004 2003
Vehicle units:
Used vehicles 92 % 91 % 91 % 91 %
New vehicles 8 9 9 9
Total 100 % 100 % 100 % 100 %
Vehicle dollars:
Used vehicles 88 % 87 % 88 % 87 %
New vehicles 12 13 12 13
Total 100 % 100 % 100 % 100 %
Retail Unit Sales
Three Months Ended Six Months Ended
August 31 August 31
2004 2003 2004 2003
Used vehicles 62,396 60,150 124,749 118,195
New vehicles 5,756 5,842 11,600 11,725
Total 68,152 65,992 136,349 129,920
Average Retail Selling Prices
Three Months Ended Six Months Ended
August 31 August 31
2004 2003 2004 2003
Used vehicles $15,693 $15,484 $15,678 $15,377
New vehicles $23,706 $23,723 $23,463 $23,392
Weighted average $16,370 $16,214 $16,340 $16,100
About CarMax
CarMax, a Fortune 500 company, is the nation's leading specialty retailer of used cars. Headquartered in Richmond, Va., CarMax currently operates 55 used car superstores in 26 markets. CarMax also operates 11 new car franchises, all of which are integrated or co-located with its used car superstores. During the twelve month period ended August 31, 2004, the company sold 230,653 used cars, which is 91 percent of the total 252,169 vehicles the company sold during that period. For more information, access the CarMax Web site at http://www.carmax.com/.