Tom Folliard didn’t mince words.

“The first quarter of FY17 was a challenging one for us,” the CarMax chief executive officer said during a conference call Tuesday discussing the company’s first quarter earnings report.

Total revenues increased by 2.8 percent, he said, while used unit comps were slightly positive — up 0.2 percent — and total used units grew 4 percent. Comp units were driven by an improvement in conversion, Folliard said, which offset a modest decrease in store traffic.

Folliard said he believed that decline in traffic is both “predominantly and disproportionately a result in decrease of Tier 3 sales.” (Tier 3 consumers are those who credit score falls between 620 and 659.)

Chief financial officer Tom Reedy noted a continuing downward trend in applications by consumers at the lower end of the credit spectrum. He said that Tier 3 financing as a percent of sales declined to 11.9 percent compared to the first quarter of last year, which he attributed this to lower applicant volume and credit tightening by third-party vendors.

President Bill Nash noted that as a percentage of sales mix this quarter, vehicles zero to 4 years old remained essentially flat compared to last year at approximately 77 percent. Midsize and large SUVs and trucks as a percentage of sales increased by more than 2 percent to approximately 25 percent in this first quarter compared to last year’s first quarter and remained flat compared to the fourth quarter.

Nash said two stores were opened during the first quarter, in Springfield, Ill., and in San Francisco. Subsequent to the end of the quarter, CarMax opened a store in El Paso, Texas.

He said the company plans to open an additional 13 stores in FY17. Two of those will be in the second quarter: one in Bristol, Tenn., a new market for CarMax, and one in Boston, which will be the company’s third store in that area.

Nash highlighted that the company unveiled a new website in April.

“It combines an upgraded and enhanced design with a seamless experience across all devices. We have also upgraded the entire site to a state-of-the-art technology platform,” he said. “This will allow us to more quickly innovate, test new capabilities and personalize the experience based on the customer’s individual preferences.”

CarMax is also testing an online financing protocol in 10 of its stores.

 “We’ll have sales consultants involved in the process,” Nash said. “We’ll contact a customer of they are declined.”

A call participant asked if CarMax foresees a time when store count might not be growing as much, but the company is reaching more customers online.

“We think that to be successful you need to have a really good presence in both,” Folliard said.

“Consumers are being much more informed before they come into the store. So they are doing a lot of research up front. We know nine out of 10 of our consumers who buy from us do some homework ahead of time on carmax.com,” he continued. “We are going to be focused both on traffic, both in-store traffic to the web and then equally focused on conversion.”

Another participant asked if CarMax feels the need to add Tier 3 finance companies given that Tier 3 activity is down.

Another call participant asked whether CarMax sees a need to add financing options or take on additional originations in the Tier 3 space.

“As far as looking at our Tier 3 lenders, we will do that from time to time. We test lenders when it makes sense,” Folliard said.

“As far as Tier 3, I would characterize it as steady as she goes.”