Participants on the call will include Tom Folliard, Interim Executive Chair of the Board, Keith Barr, President and CEO, Enrique Mayor-Mora, Executive Vice President, CFO and Jon Daniels, Executive Vice President, CarMax Auto Finance. The live conference call can be accessed by dialing (800) 225-9448 (or (203) 518-9708 for international access) and entering the conference ID 3171396. A live audio webcast also will be available at investors.carmax.com. CarMax Announces Fourth Quarter Conference Call Mar 19, ...

This story was originally published on WardsAuto. To receive daily news and insights, subscribe to our free daily WardsAuto newsletter. Used-car retailer CarMax appointed former hotel industry executive Keith Barr as president and CEO effective March 16, the company announced in a press release. CarMax CEO Keith Barr David McCreight, current interim CarMax president and CEO, will assume his prior duties as an independent director of the board, the company said. Tom Folliard will retain his role as inter ...

Group 1 - CarMax, Inc. (KMX) has attracted investment from Starboard Value, a hedge fund known for its activist campaigns, which has prior experience in the automotive industry [1] - The focus is on identifying high-quality companies capable of reinvesting capital for impressive returns, with an emphasis on long-term capital compounding and a high compound annual growth rate [1] - The investment strategy is primarily conservative, with occasional pursuits of opportunities that present a favorable risk-reward ratio, ensuring overall portfolio stability [1]

Core Insights - An activist investor, Starboard Value, has proposed strategies to enhance CarMax's competitiveness by reducing used car prices [1][4][6] Group 1: Company Performance - CarMax shares recently increased by approximately 2%, following a rise of up to 8% after Starboard Value nominated two directors to its board [2] - Despite a year-to-date increase, CarMax's shares have declined over 40% in the past 12 months, contrasting with competitor Carvana's stock performance [2] Group 2: Investor Recommendations - Starboard Value has suggested several strategies, including updating the digital trade-in experience, reducing reconditioning costs, and implementing stricter cost controls [4] - A key recommendation is to lower prices by $100 to $300 per vehicle to enhance market share, as the current per-unit gross profit targets are seen as too rigid [4][5] - Starboard emphasizes the need for dynamic pricing to maintain transaction volume in a more transparent market [5] Group 3: Leadership and Future Direction - CarMax is set to welcome a new CEO, Keith Barr, later this month, with Starboard expressing support for his leadership [6] - The company acknowledges productive engagement with Starboard and aims to leverage this collaboration to unlock its potential [6]

Core Viewpoint - CarMax Inc. is experiencing a rise in share prices following activist investor Starboard Value LP's push for board changes and operational improvements [1] Group 1: Activist Investor Actions - Starboard Value LP is advocating for tighter cost management and enhanced operational execution as CarMax prepares for leadership changes [1][2] - The investor group believes that CarMax's operating model has greater potential than its recent performance indicates and has nominated two directors for election at the upcoming shareholder meeting [2][3] - Starboard has highlighted that operational missteps have obscured the effectiveness of CarMax's omnichannel retail strategy [2] Group 2: Proposed Improvements - The hedge fund suggests that enhancements in digital operations, pricing strategy, and vehicle reconditioning could lead to better financial results [3] - Starboard is calling for a more significant reduction in selling and administrative expenses to improve profitability [3] Group 3: Company Response - CarMax has acknowledged the nomination notice from Starboard and stated that its board is engaged in constructive discussions with the activist investor [4] - The board supports the incoming CEO Keith Barr, who will officially take over on March 16, and emphasizes ongoing efforts to improve operations and shareholder returns [4][5] - CarMax has indicated that shareholders do not need to take immediate action, as the board will provide a formal recommendation regarding Starboard's nominees later [5] Group 4: Market Reaction - CarMax shares increased by 1.58%, reaching $44.79 at the time of publication [5]

Core Viewpoint - Starboard Value LP has invested approximately $350 million in CarMax Inc. and aims to enhance the company's performance under new CEO Keith Barr, believing that the current issues are fixable and that Barr can drive necessary changes [1][2]. Investment and Leadership Changes - Starboard has nominated its CEO Jeff Smith and Bill Cobb to the CarMax board, indicating a strategic push for influence in the company's direction [1]. - The activist investor supports the new CEO, emphasizing optimism about his potential to catalyze change at CarMax [1]. Performance and Market Position - CarMax, the largest used car retailer in the US, has been underperforming relative to its potential, with sales exceeding 1 million vehicles annually [2]. - The company has faced increased competition from rivals like Carvana, despite being a pioneer in online automobile sales [3]. Business Model and Operational Improvements - CarMax's business model involves buying, reconditioning, and selling cars, supported by financing and warranties, which can create a beneficial cycle of lower costs and competitive pricing when executed effectively [4]. - Starboard believes that enhancing customer experience and operational efficiency could lead to significant improvements, including reducing administrative and overhead costs by over $300 million [4]. - The investor advocates for CarMax to adopt more dynamic pricing strategies to further enhance its market position [4].

Core Viewpoint - CarMax's stock increased following the announcement that activist investor Starboard Value acquired a stake valued at approximately $350 million and nominated two candidates for the company's board [1] Group 1: Investor Actions - Starboard Value, an activist investor, has taken a significant stake in CarMax, amounting to around $350 million [1] - The investor is advocating for improvements in CarMax's digital experience and a reduction in general costs [1] Group 2: Management Changes - Starboard Value has nominated two candidates for the CarMax board, indicating a push for changes in the company's leadership and strategy [1] - The new CEO is urged to act swiftly in response to the investor's demands and the current market conditions [1]

Industry Overview - Rising affordability pressures are reshaping the U.S. auto market, leading to a decline in new-vehicle sales year over year due to higher prices and borrowing costs [1] - Consumers are expected to shift towards the used-vehicle market for more affordable options, creating opportunities for companies in this sector [1] Company Comparisons - CarMax (KMX) and Carvana (CVNA) are two prominent players in the used vehicle industry, with differing business models; CarMax operates a nationwide store network with both physical and digital sales, while Carvana is a pure online player known for its digital-first experience [2] - Over the past year, CarMax shares have fallen approximately 42%, while Carvana's stock has surged around 78%, indicating contrasting market rewards [3][8] - Valuations differ significantly, with Carvana trading at a forward sales multiple of about 2.46x compared to CarMax's 0.23x [4][8] CarMax Analysis - CarMax is the largest retailer of used vehicles in the U.S., generating additional revenue through financing and services, which allows it to capture value across multiple transaction stages [10] - The company's third-quarter fiscal 2026 results showed mixed performance; while earnings and revenues exceeded expectations, both declined year over year due to softened used-vehicle demand [11] - CarMax's financing segment generated $174.7 million in income, up over 9% year over year, contributing to overall profitability [11] - The company benefits from a nationwide footprint and logistics network, which enhances vehicle sourcing and distribution efficiency [12] - CarMax is strengthening its ecosystem through acquisitions, such as the purchase of Edmunds, and partnerships that enhance its digital capabilities and insights into used electric vehicles [13] - Management is targeting at least $150 million in SG&A run-rate savings by fiscal 2027, with significant capital returned to shareholders through stock buybacks [14] Carvana Analysis - Carvana is the second-largest used car retailer in the U.S., holding about 1.6% of the fragmented automotive retail market, indicating room for expansion [15] - In 2025, Carvana's retail sales units rose 43% year over year to approximately 596,000 vehicles, with revenues increasing 49% to over $20 billion [16] - Profitability improved, with adjusted EBITDA climbing over 60% to $2.2 billion, and margins expanding from 10.1% to 11% [16] - However, rapid expansion has led to operational pressures, with increased reconditioning costs affecting profit per vehicle [17] - Carvana's outlook for 2026 is somewhat vague, although management anticipates significant growth in retail units sold and adjusted EBITDA [18] - The company believes it can support annual sales of 3 million vehicles, backed by real estate and facilities capable of processing 1.5 million vehicles per year [19] Investment Perspective - CarMax represents a more stable and value-oriented opportunity, benefiting from a well-established network and diversified revenue model, even amid soft sales trends [22] - Ongoing cost-cutting initiatives and logistics improvements could strengthen margins and shareholder returns over time [22] - In contrast, Carvana's growth story comes with operational volatility and a premium valuation, suggesting that much of the growth optimism may already be priced in [21] - CarMax's lower valuation compared to Carvana makes it a more attractive investment choice, with a Zacks Rank of 2 (Buy) versus Carvana's 3 (Hold) [24]

Core Viewpoint - CarMax's Board of Directors has received a notice from Starboard Value LP nominating two directors for election at the 2026 Annual Meeting of Shareholders, indicating ongoing engagement and discussions aimed at enhancing shareholder value [1] Group 1: Company Leadership and Strategy - CarMax has appointed Keith Barr as the new CEO, effective March 16, 2026, following a series of leadership changes including David McCreight as Interim President and CEO and Tom Folliard as Interim Executive Chair [1] - The Board is committed to improving business performance and has accelerated succession planning to ensure effective leadership [1] Group 2: Financial Performance and Operations - In the fiscal year ending February 28, 2025, CarMax sold approximately 790,000 used vehicles and 540,000 wholesale vehicles at auctions, while CarMax Auto Finance originated over $8 billion in auto loans, contributing to a nearly $18 billion portfolio [1] - The company has over 250 store locations and more than 28,000 associates, maintaining its position as the largest retailer of used autos in the U.S. [1] Group 3: Shareholder Engagement - CarMax's Board will present its recommendation on the proposed nominees from Starboard Value in due course, and shareholders are not required to take any action at this time [1] - The company plans to file a proxy statement with the SEC regarding the 2026 Annual Meeting, encouraging shareholders to read the materials when available for important information [2]

Core Insights - Starboard Value has acquired a stake in a used car retailer valued at approximately $350 million [1] Company Summary - The investment by Starboard Value indicates confidence in the used car retail sector, potentially signaling growth opportunities within the industry [1] Industry Summary - The used car market continues to attract significant investment, reflecting ongoing interest from institutional investors [1]