CarMax stock rallies as sales boost Q1 earnings
CarMax (NYSE:KMX) saw its stocks jump on Wednesday after posting a 25% spike in its first quarter profits due to strong growth in used car sales.
The new, used and wholesale car retailer posted net earnings of $126.3 million, or $0.55 per share, for the three months ending May 31. In the year-ago period, profits were $101.1 million, or $0.44 per share.
The company, which beat analysts' first quarter estimates of $0.47 per share by a wide margin, saw its stock on the New York Stock Exchange spike 6.91% to trade at $32.63 per share as of 11:20 am EDT on Wednesday.
Revenues for the Richmond, Virginia-based company were $2.7 billion, an 18% increase from a year earlier. Sales from vehicles attributed for $2.6 billion of revenues, while other revenues, like from the auto service department, contributed $68.2 million.
Used cars sales were up over 13% to $2.1 billion, while new car sales increased 21.6% to $61.9 million. Revenue from wholesale vehicles jumped 51% to $477.8 million.
Comparable store sales increased 6%, fueled by an increase in customer traffic, despite high fuel costs and unemployment rates, among other unfavourable economic conditions.
Sales of the company's extended service plan increased 12% to $46.36 million, while the service department saw its revenues drop 4.5% to $25.2 million.
However, CarMax, which opened two new locations in Louisiana and Kentucky in the first quarter, with plans to open another eight to ten by the year's end, saw its gross margins slip to 14.3% versus 14.7% a year ago.
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