RICHMOND, Va. -

Even though CarMax suffered a decline in comparable-store used unit sales during the second quarter, the company still posted gains in net sales and operating revenue.

CarMax indicated Thursday that its second-quarter net sales and operating revenues jumped 11 percent to $2.59 billion from $2.34 billion in the second quarter of last year.

However, the company determined comparable-store used unit sales declined 2 percent for the quarter, and total used unit sales dipped 1 percent.

But another upside was CarMax’s total wholesale unit sales performance during the second quarter. This business segment posted a 23-percent year-over-year gain.

All told, the company said it generated $111.9 million or 49 cents per diluted share in net income during the second quarter. After the same quarter of its previous fiscal year, the company posted $107.9 million or 48 cents per diluted share in net income.

After looking at the overall numbers, CarMax president and chief executive officer Tom Folliard stated, “We are pleased with our ability to increase earnings despite the 2-percent decline in comparable-store used unit sales.

“Our diversified business model enabled us to deliver the second highest quarterly earnings in our history, as the strength of our wholesale and finance operations offset the effect of softer used unit comps,” Folliard continued.

“We remain focused on continuing to expand our store base and drive execution and efficiencies,” he added.

Taking a deeper look into the data, CarMax said it believes the 2-percent decline in used unit comps primarily reflected the recent economic slowdown and further reductions in consumer confidence levels.

“Traffic and conversion trends softened compared with recent quarters,” CarMax stressed.

“Average selling prices continued to climb, as the tight supply of late-model used vehicles increased our acquisition costs compared with the prior year,” the company went on to say.

Officials also touched on why wholesale unit sales increased 23 percent compared with the second quarter of its last fiscal year.

“Similar to the last several quarters, our wholesale volumes benefited from a strong increase in appraisal traffic and a continued strong buy rate,” they explained.

However, CarMax acknowledged its other sales and revenues fell 5 percent compared with the prior year’s second quarter.

“This decline was largely driven by the decrease in third-party finance fees, which resulted from the decision by CarMax Auto Finance earlier this year to retain an increased portion of the loans that third-party providers had been purchasing,” the company noted.

“This decision should result in increased CAF income over time,” CarMax asserted.

More 2Q Figures

In other elements of its second-quarter financial report, CarMax shared that total gross profit increased to $354.3 million from $349.1 million a year earlier.

The company said that gain primarily reflected the strong results of its wholesale auctions.

CarMax’s used-vehicle gross profit ticked down slightly to $224.0 million from $228.1 million. Officials explained the decline resulted from the combination of a slight moderation in gross profit per unit — to $2,178 from $2,205 — and the 1-percent decline in total used unit volumes.

Meanwhile, CarMax calculated that its second-quarter wholesale gross profit shot up 33 percent year-over-year to $78.8 million from $59.3 million. Besides that 23-percent increase in wholesale unit sales, the company also posted a gross profit per unit improvement, rising to $929 from $858.

“The strength of our wholesale profit per unit reflected the continued strong demand and pricing at our auctions,” officials highlighted.

Additional Details about CarMax Auto Finance

Officials determined CAF income increased 21 percent to $63.8 million compared with $52.6 million in last year’s second quarter. They noted this jump came primarily by higher interest margin, which rose to $85.6 million from $72.2 million.

“The increase in interest margin reflected increases in both average managed receivables and the spread between the interest charged to consumers and our related funding costs,” CAF stated.

The company division also revealed its net loans originated increased 27 percent compared with the prior year quarter.

“The increase reflected our previously reported decision to retain an increasing portion of the loans that third-party providers had been purchasing, as well as higher average selling prices,” CAF officials indicated.

SG&A, Store Opening and Credit Facilities

In other second-quarter news the company reported Thursday, CarMax acknowledged its selling, general and administrative expenses increased 5 percent to $236.4 million from $225.2 million.

“We have continued to fund initiatives that we believe will support the long-term growth of our company, including increased advertising and targeted spending to support future store growth,” CarMax officials emphasized.

“The SG&A ratio improved to 9.1 percent from 9.6 percent in the prior’s year quarter, primarily due to the effect of higher average selling prices,” they added.

CarMax reiterated that it opened another rooftop during the second quarter, expanding its presence in the San Diego market with a facility in Escondido, Calif.

Also during the quarter, the company entered into a new five-year, $700 million unsecured revolving credit facility, replacing the existing secured facility that was scheduled to expire in December.

CarMax also renewed its $800 million warehouse facility that was scheduled to expire in August.

“Included in this renewal was a temporary increase in our total warehouse capacity to $2.0 billion,” the company said. “The total warehouse capacity will return to $1.6 billion concurrent with the closing of the sale of $650 million of receivables in the 2011-2 term securitization.”