CarMax Stock Hits 52-Week Low After Q2 Earnings - Here's Why

Core Viewpoint - CarMax Inc experienced a significant decline in its second-quarter performance, with earnings and revenue falling short of analyst expectations due to weaker retail sales and increased loan loss provisions [1][2]. Financial Performance - The company reported second-quarter earnings per share of 64 cents, missing the analyst consensus estimate of $1.09 [1]. - Quarterly sales totaled $6.594 billion, down 6% year over year, and also missed the expected $7.024 billion [1]. - Total gross profit was $717.7 million, a decrease of 5.6% compared to the same quarter last year [6]. Segment Performance - CarMax Auto Finance (CAF) reported income of $102.6 million, down 11.2%, primarily due to higher loan loss provisions [2]. - Retail used vehicle unit sales declined by 5.4% to 199,729, with comparable store used unit sales down 6.3% [3]. - Wholesale vehicle unit sales decreased by 2.2% to 138,302, while wholesale revenues edged down 0.4% [3]. Sales and Operations - Combined retail and wholesale used vehicle unit sales fell 4.1% to 338,031 [2]. - The company purchased a total of 293,000 vehicles in the second quarter, a 2.4% decrease from the previous year [4]. - The company opened three new store locations and a stand-alone reconditioning/auction center to support market operations [6][7]. Margins and Expenses - Unit margins remained solid, with gross profit of $2,216 per retail used unit and $993 per wholesale unit [6]. - Quarterly SG&A expenses decreased by 1.6% to $601.1 million compared to the prior-year quarter, with plans for further efficiency improvements [7].