CarMax(US:KMX)2021-04-19 16:00Sales Performance - Used vehicle sales decreased to $15,713.6 million in FY21 from $17,169.5 million in FY20, a decline of 8.5%[1]. - Net sales and operating revenues fell by 6.7% to $18,950.1 million in FY21 compared to $20,320.0 million in FY20[1]. - Gross profit decreased by 12.6% to $2,379.1 million in FY21 from $2,722.3 million in FY20[1]. - Net earnings dropped by 15.9% to $746.9 million in FY21, down from $888.4 million in FY20[1]. - Used vehicle units sold decreased by 9.7% to 751,862 in FY21 from 832,640 in FY20[1]. - Comparable store used vehicle unit sales declined by 11.7% in fiscal 2021, reflecting the impact of COVID-19 related store closures and reduced customer traffic[213]. Financing and Receivables - CarMax Auto Finance (CAF) financed 42.5% of retail used vehicle unit sales in fiscal 2021, leveraging proprietary scoring models for underwriting decisions[34]. - The company managed a portfolio of $13.85 billion in receivables as of February 28, 2021, servicing approximately 1,054,000 customer accounts[17]. - CAF income increased by 23.4% to $562.8 million in FY21 compared to $456.0 million in FY20[1]. - The financing penetration for used vehicles through the company's channel (CAF) decreased to 45.5% in fiscal 2021 from 46.7% in fiscal 2020[215]. Market Position and Strategy - CarMax's market share for age 0- to 10-year-old vehicles was approximately 3.5% in calendar 2020, with a decline from 4.7% in 2019[37]. - The company has completed the rollout of its omni-channel platform, which is critical for capturing expected benefits and enhancing customer experience[104]. - CarMax's competitive advantages include no-haggle pricing, a broad selection of vehicles, and a customer-friendly sales process, positioning the company for continued market share growth[38]. - The company plans to open ten new stores during fiscal 2022 after resuming its store expansion strategy[192]. Operational Changes and Challenges - The COVID-19 pandemic has significantly disrupted CarMax's business operations, leading to weakened consumer demand and restricted retail operations[82]. - The company implemented hiring freezes, employee furloughs, and pay reductions due to COVID-19, which may need to be reinstated if the pandemic worsens[108]. - The company transitioned its wholesale auctions to an online platform during fiscal 2021, with plans to continue using online technology for future auctions[40]. Customer Experience and Engagement - The omni-channel platform was fully rolled out in the second quarter of fiscal 2021, allowing customers to buy vehicles online, in-store, or through a combination of both[20][38]. - CarMax's website and mobile apps received an average of 27 million monthly visits during fiscal 2021, with about 96% of customers purchasing a vehicle after visiting online[59]. - Approximately 60% of customers who purchased a retail used vehicle also bought an extended service plan (ESP), and about 20% purchased guaranteed asset protection (GAP)[33]. Workforce and Diversity - As of February 28, 2021, CarMax employed a total of 26,889 associates, including 3,923 in-store sales associates and 1,609 sales associates in Customer Experience Centers[62]. - The company has a commitment to pay the majority of its associates $15 or more per hour and offers health benefits to all full-time associates[62]. - CarMax has implemented a quarterly plan for measuring and tracking progress on diversity and inclusion commitments[69]. Financial Position and Stock Performance - The company has not paid any dividends on its common stock and does not plan to do so in the foreseeable future[155]. - During the fourth quarter of fiscal 2021, CarMax repurchased a total of 688,471 shares of common stock at an average price of $94.68 and $100.60[157]. - The board authorized the repurchase of up to $2 billion of common stock with no expiration date, allowing for purchases in open market or privately negotiated transactions[157]. - CarMax's cumulative total shareholder return from February 29, 2016, to February 28, 2021, increased to $258.34, compared to $100.00 at the start[159]. Risks and Regulatory Environment - The company is subject to various federal, state, and local environmental laws and regulations that could affect its operations and compliance costs[78]. - The company is sensitive to changes in retail prices for new and used vehicles, which could adversely affect sales and margins[111]. - The company operates in a highly regulated industry, and changes in laws or regulations could adversely affect its business[132]. - The ongoing COVID-19 pandemic may continue to influence consumer behavior and the overall economic landscape, posing risks to CarMax's business model[84].