CarMax used sales spike by almost 10%
CarMax announced first-quarter results for the start to its 2016 fiscal year, reporting another record quarter for sales and earnings.
With net sales and operating revenues increasing by 7.1 percent to $4.041 billion, it is apparent the retailer — which was recently featured in our Top 100 Independent Dealers issue — had a robust start to the year for sales.
And net earnings grew 7.3 percent to $182 million.
“We had another great quarter, setting all-time records for quarterly sales and earnings,” said Tom Folliard, president and chief executive officer. “Continued strong performances in our used, wholesale and CAF operations, along with the growth of our store base and our ongoing share repurchase program, contributed to our solid results.”
In fact, total used units sales rose by 9.3 percent from 150,528 sold a year ago. This time around, the company sold 164,510 used vehicles in Q1. This represented sales worth $3.3 million, up from $3 million in Q1 fiscal 2015.
Used unit sales in comparable stores were also up 4.9 percent versus the prior year’s Q1.
The company explained comparable store unit sales benefitted in part by improved conversion and continued growth in customer traffic.
Used-vehicle average selling prices were down slightly, though, dropping 1.6 percent year-over-year to rest at $19,851.
And the company’s total gross profit rose by 8.4 percent versus the first quarter of fiscal 2015 to $543.8 million — due in part to success in used-vehicle sales.
In fact, used-vehicle gross profit was up 8.3 percent to $361.9 million, driven by an almost 10-percent increase in pre-owned sales.
Used-vehicle gross profit for unit, though, remained flat at $2,200.
Wholesale vehicles sales were up for the company as well, posting a 4.7-percent increase year-over-year.
“Wholesale unit sales benefited from the growth of our store base, partially offset by a decline in our vehicle buy rate,” the company said.
Wholesale units were going for average of $5,449, virtually flat year-over-year.
Because of the ramped up wholesale unit sales, wholesale vehicle gross profit was up by 3.3 percent year-over-year.
CarMax Auto Finance was also performing well as the fiscal year got underway. CAF income increased 15.3 percent to $109.1 million, driven in part by an increase in average managed receivables and continued favorable loss experience. Average managed receivables grew 17.2 percent to $8.66 billion.
“In recent quarters, we experienced better than anticipated loan charge-offs, which had a favorable effect on both the provision for loan losses and the ending allowance for loan losses,” the report stated. “The total interest margin, which reflects the spread between interest and fees charged to consumers and our funding costs, declined to 6.3 percent of average managed receivables in the current quarter from 6.7 percent in last year’s first quarter.”
Besides used and wholesale units, other sales and revenues were up by 14.3 percent year-over-year.
This was due in part to extended protection plan sales, whose revenues rose by 12.5 percent, due in part to growth in retail unit sales.
And this might just be the beginning of the company’s continued success in used sales.
During the first quarter of fiscal 2016, the company opened three new stores, including two stores in new markets (Minneapolis and Gainesville, Fla).
CarMax also opened its third store in the Philadelphia market. And shortly after the close of fiscal Q1, the company expanded its presence in the Denver market with two additional stores, and added a second rooftop in the Providence, R.I., market.
For more insight into the company’s fiscal Q1 2016 performance, as well as extra analysis from the CarMax conference call, stay tuned to AR Today.