Carmax Raises Second Quarter Expectations

RICHMOND, Va., Aug. 23, 2005 -- For the second quarter ending August 31, 2005, CarMax, Inc. today:

  * Raised comparable store used unit sales expectations to growth of
    approximately 10%, and

  * Raised earnings per share expectations to approximately 37 cents.

On June 20, 2005, CarMax had estimated second quarter comparable store used unit sales growth in a range of 3% to 9% and earnings per share in a range of 29 cents to 34 cents.

"During our second quarter, our consumer-preferred market offer and continuing strong execution in our stores have allowed us to take advantage of the increase in customer traffic we have seen during the quarter," said Austin Ligon, president and chief executive officer.

"Traffic is up compared with the second quarter of last year, at least partly due to the increase in consumer interest and appraisal traffic generated by new car employee pricing programs," Ligon said. "As a result, our sales pace has increased from the rate we were seeing in early June. We believe the employee pricing programs have also clarified dealer new car pricing, which usually works to CarMax's benefit.

"While wholesale auction prices for larger SUVs and trucks have plummeted, wholesale auction prices for other vehicles are still above historical norms," said Ligon. "We continue to keep our appraisal offers consistent with broader market trade-in offers, employing the lessons we learned during the more challenging periods last year and this spring. Doing so has enabled us to keep our retail pricing attractive to consumers. We also are keeping our inventories closely aligned with our sales pace.

"In addition, we currently expect CarMax Auto Finance income to be higher than original expectations as CAF has benefited from increased penetration," said Ligon. "This increase is being driven in part by a rise in finance applications from prime-rated customers."

About CarMax

CarMax, a Fortune 500 company and one of the Fortune 2005 "100 Best Companies to Work For," is the nation's largest retailer of used cars. Headquartered in Richmond, Va., CarMax currently operates 62 used car superstores in 28 markets. CarMax also operates seven new car franchises, all of which are integrated or co-located with its used car superstores. During the twelve month period ended May 31, 2005, the company retailed 264,958 used cars, which is 93 percent of the total 285,354 vehicles the company retailed during that period. For more information, access the CarMax website at http://www.carmax.com/.