Used vehicles retailer CarMax, Inc. (KMX) reported Thursday a profit for the second quarter that remained flat with last year, as 6.6 percent revenue growth and profits at its finance unit CarMax Auto Finance or CAF were offset by higher selling costs. Earnings per share for the quarter missed analysts' expectations, while quarterly revenues topped their estimates by a whisker.
CAF income for the quarter grew 19 percent to $75.7 million from the year-ago quarter, primarily due to the 14 percent increase in average managed receivables. The company noted that it incurred higher selling, general and administrative costs amid the ramp in its store growth rate, and the tough comparisons in its wholesale operations.
"We are pleased with our improved retail sales in the second quarter, as used unit comps strengthened and we continued to open new stores," President and CEO Tom Folliard said in a statement.
The Richmond, Virginia-based Fortune 500 company reported net earnings of $111.64 million or $0.48 per share for the second quarter, compared to $111.15 million or $0.48 per share in the prior-year quarter.
On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.52 per share for the second quarter. Analysts' estimates typically exclude special items.
Net sales and operating revenues for the quarter increased 6.6 percent to $2.76 billion from $2.59 billion in the same quarter last year, and topped eleven Wall Street analysts' consensus estimate of $2.75 billion by a whisker.
Comparable store used vehicle revenues grew 5 percent for the second quarter, with comparable store used vehicle unit sales increasing 5 percent, fueled by improved conversion, which was supported by better credit offers and continued strong in-store execution.
Total used vehicle unit sales rose 8 percent, while total used vehicle revenues in dollars rose 9 percent from the year-ago quarter. Used vehicle sales made up about 79.5 percent of CarMax's business.
Used vehicle sales for the second quarter rose 8.8 percent to $2.19 billion from the prior-year quarter, while sales for wholesale vehicles totaled $437.1 million, down 4.5 percent from the same quarter last year.
New vehicle sales grew 31 percent to $61.4 million from the year-ago quarter, while other sales and revenues edged down 0.8 percent to $67.6 million from the prior-year quarter.
Gross profit for the quarter was $368 million, up 3.9 percent from $354.3 million in the year-ago quarter, while gross margin percentage contracted 40 basis points to 13.3 percent from last year.
Looking ahead, CarMax said it intends to open ten superstores in fiscal 2013, double the number opened in fiscal 2012.
KMX closed Wednesday's regular trading session at $31.97, up $0.46 on a volume of 2.62 million shares, higher than the three-month average volume of 2.01 million shares. In the past 52-week period, the stock has been trading in a broad range of $22.77 to $35.17.
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