CarMax Reports Record Third Quarter Sales and Announces Fiscal 2006 Store Opening Plan;
Expects Third Quarter EPS of Approximately 17 Cents
RICHMOND, Va., Dec. 6 -- CarMax, Inc. today reported record sales for the third quarter ended November 30, 2004.
* Total sales increased 13% to $1.22 billion from $1.07 billion in the
same period last year.
* Total used unit sales grew 15% for the quarter.
* Comparable store used unit sales rose 2% for the quarter.
* The company now expects third quarter earnings of approximately 17
cents per share.
* The company announced plans to open approximately nine used car
superstores in the next fiscal year, expanding its superstore base by
approximately 16%.
Sales Commentary
"As we noted in our November 16 release, our third quarter used car sales trends were stronger than the performance we experienced during the late spring and summer," said Austin Ligon, president and chief executive officer. "In the quarter, used car wholesale prices fell in line with what we generally see during the autumn model-year-changeover period, and we believe this contributed to the stronger sales performance. We also believe we recovered some of the sales lost during the second quarter to severe weather in Florida and the southeastern U.S. In addition, as we originally expected, DRIVE Financial Services, a new finance provider focused on subprime customers, contributed approximately 3% to used unit comps."
Third Quarter Earnings Expectations
"For the third quarter, we now expect earnings per share of approximately 17 cents, which includes a benefit of about 1 cent from the adjustment in the valuation of our retained interests in securitized receivables," Ligon said. "We plan to offer guidance for our fourth quarter and current fiscal year when we release third quarter earnings on December 17."
Used Car Store Openings and New Car Franchise Disposals
CarMax opened two superstores during the third quarter, entering the Albuquerque, N. M., market with a standard superstore and adding a satellite superstore in Richmond, Va. CarMax also opened a satellite superstore in the Miami, Fla., market on December 1. The company has opened nine superstores thus far in fiscal 2005, an increase of 18% in the used car superstore base. No additional superstore openings are planned during the balance of the fiscal year.
During the third quarter, the company completed the sale of its Ford franchise in Kenosha, Wis., and returned its Mitsubishi franchise in Atlanta, Ga., to the manufacturer. In addition, the company expects to return its remaining two Mitsubishi franchises to the manufacturer in the fourth quarter, one at its Dulles superstore in northern Virginia and one in Kenosha. Following these actions, CarMax will have seven new car franchises, including three Chrysler franchises, two Toyota franchises, one Nissan franchise, and one Chevrolet franchise. The company plans to operate this core group of new car franchises for the foreseeable future.
Fiscal 2006 Store Opening Plan
During the fiscal year ending February 28, 2006, the company plans to expand its used car superstore base by approximately 16%, consistent with CarMax's used car superstore annual growth target in the range of 15% to 20%. The company expects to open approximately nine used car superstores, including five standard superstores and four satellite superstores. Planned entries into mid-sized markets include Jacksonville, Fla.; Salt Lake City, Utah; Wichita, Kan.; and Virginia Beach, Va. Satellite superstore additions are planned for Independence, Mo.; Miami, Fla.; and Nashville, Tenn. CarMax also plans to add one standard and one satellite superstore to the Los Angeles, Calif., market, bringing the total number of stores in this large market to five.
Retail Vehicle Sales Changes
Three Months Ended Nine Months Ended
November 30 November 30
2004 2003 2004 2003
Comparable store
vehicle sales:
Used vehicle units 2 % 2 % (3)% 6 %
New vehicle units 11 % 2 % 12 % (2)%
Total vehicle units 2 % 2 % (2)% 5 %
Used vehicle dollars 3 % 4 % (1)% 7 %
New vehicle dollars 9 % 5 % 11 % 0 %
Total vehicle dollars 4 % 4 % 0 % 6 %
Total vehicle sales:
Used vehicle units 15 % 13 % 8 % 18 %
New vehicle units (6)% 1 % (3)% (3)%
Total vehicle units 13 % 12 % 7 % 16 %
Used vehicle dollars 16 % 16 % 10 % 19 %
New vehicle dollars (7)% 4 % (3)% (1)%
Total vehicle dollars 13 % 14 % 9 % 16 %
Retail Vehicle Sales Mix
Three Months Ended Nine Months Ended
November 30 November 30
2004 2003 2004 2003
Vehicle units:
Used vehicles 93 % 91 % 92 % 91 %
New vehicles 7 9 8 9
Total 100 % 100 % 100 % 100 %
Vehicle dollars:
Used vehicles 89 % 87 % 88 % 87 %
New vehicles 11 13 12 13
Total 100 % 100 % 100 % 100 %
Retail Unit Sales
Three Months Ended Nine Months Ended
November 30 November 30
2004 2003 2004 2003
Used vehicles 58,908 51,361 183,657 169,556
New vehicles 4,765 5,079 16,365 16,804
Total 63,673 56,440 200,022 186,360
Average Retail Selling Prices
Three Months Ended Nine Months Ended
November 30 November 30
2004 2003 2004 2003
Used vehicles $15,591 $15,393 $15,650 $15,382
New vehicles $23,804 $23,968 $23,562 $23,566
Weighted average $16,205 $16,165 $16,297 $16,120
About CarMax
CarMax, a Fortune 500 company, is the nation's leading specialty retailer of used cars. Headquartered in Richmond, Va., CarMax currently operates 58 used car superstores in 27 markets. CarMax also operates nine new car franchises, all of which are integrated or co-located with its used car superstores. During the twelve month period ended November 30, 2004, the company sold 238,200 used cars, which is 92% of the total 259,402 vehicles the company sold during that period. For more information, access the CarMax Web site at http://www.carmax.com/.
Forward-looking Statements
The company cautions readers that the statements contained herein regarding the company's future business plans, operations, opportunities, or prospects, including without limitation any statements or factors regarding expected sales, margins, or earnings, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon management's current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results to differ materially from anticipated results. For more details on factors that could affect expectations, see the company's Annual Report on Form 10-K for the fiscal year ended February 29, 2004, and its quarterly or current reports as filed with or furnished to the Securities and Exchange Commission.