Financial Data and Key Metrics Changes - The second quarter net earnings per diluted share was $0.64, down from $0.85 a year ago, primarily due to lower volume and a CAF loss provision adjustment [17][22] - Total gross profit was $718 million, a decrease of 6% from the previous year's second quarter [17] - SG&A expenses for the second quarter were $601 million, down 2% from the prior year, driven primarily by lower stock-based compensation [18][20] Business Line Data and Key Metrics Changes - Total sales for the quarter were $6.6 billion, down 6% compared to last year, reflecting lower volume [8] - Retail unit sales declined by 5.4%, with used unit comps down 6.3% [8] - Wholesale unit sales decreased by 2.2% year-over-year, while average wholesale selling price increased by approximately $125 per unit to $7,900 [9] Market Data and Key Metrics Changes - The average selling price for used vehicles was $26,000, a year-over-year decrease of approximately $250 per unit [9] - The retail gross profit per used unit was $2,216, in line with historical averages [18] - The weighted average contract rate charged to new customers was 11.2%, down from 11.4% in the previous quarter [13] Company Strategy and Development Direction - The company is focused on driving sales, gaining market share, and delivering significant year-over-year earnings growth [5] - Key priorities include maintaining competitive prices, enhancing consumer awareness of their differentiated experience, and delivering SG&A reductions of at least $150 million over the next 18 months [6][7] - The launch of the "Wanna Drive" brand campaign aims to highlight the company's unique omnichannel experience [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that while second quarter results fell short of expectations, they remain confident in their strategy and earnings model, which is expected to produce high EPS growth with mid-single-digit retail unit growth [5][21] - There is an expectation of increased marketing spend in the back half of the year to support the new brand positioning [21] - Management acknowledged that consumer sentiment is currently low, particularly among mid to high FICO customers, which may impact sales [72] Other Important Information - The company purchased approximately 293,000 vehicles during the quarter, down 2% from last year [9] - The net promoter score is the highest since the rollout of digital capabilities, indicating high customer satisfaction [10] - The company is committed to further reducing SG&A by leveraging technology and operational efficiencies [20] Q&A Session Summary Question: Impact of pull forward in demand on used unit sales - Management indicated that the most disruptive factor was the depreciation of inventory, which impacted pricing competitiveness and sales [27][28] Question: Pricing strategy and market competitiveness - Management acknowledged the need to be more competitive with pricing and emphasized the importance of being nimble in response to market conditions [31][32] Question: Update on CarMax Auto Finance (CAF) income expectations - Management revised expectations for CAF income to be flat to slightly down year-over-year due to a larger provision impact this quarter [37][38] Question: Areas of cost reduction in SG&A - Management clarified that cost reductions will not impact growth strategy and will be reinvested in areas that drive sales, such as marketing [42][46] Question: Consumer sentiment and market conditions - Management noted that consumers, especially those with mid to high FICO scores, are currently more cautious, impacting app volume and sales [72][73] Question: Reserved inventory policy and its effect on sales - Management explained that reserved inventory is beneficial for customer interest but acknowledged the need to manage how long a vehicle can be reserved [95][96]

Financial Data and Key Metrics Changes - The second quarter net earnings per diluted share was $0.64, down from $0.85 a year ago, primarily driven by lower volume and CarMax Auto Finance (CAF) loss provision adjustments [17][22] - Total gross profit was $718 million, a decrease of 6% from the previous year's second quarter [17] - Retail gross profit per used unit was $2,216, consistent with historical averages, while wholesale gross profit per unit was $993, showing a slight decrease [17][18] Business Line Data and Key Metrics Changes - Total sales for the quarter were $6.6 billion, down 6% year-over-year, with retail unit sales declining by 5.4% and used unit comps down 6.3% [8][9] - Wholesale unit sales decreased by 2.2% compared to the second quarter last year, while average wholesale selling price increased by approximately $125 per unit to $7,900 [9] - CAF originated over $2 billion in loans, resulting in a sales penetration of 42.6%, which was 60 basis points above last year [13] Market Data and Key Metrics Changes - The average selling price of used vehicles was $26,000, reflecting a year-over-year decrease of approximately $250 per unit [9] - The company noted a pullback in demand from mid to high FICO customers, indicating a potential strain on consumer sentiment [75][94] Company Strategy and Development Direction - The company is focused on driving sales, gaining market share, and delivering significant year-over-year earnings growth, with key priorities including price competitiveness, consumer awareness, and SG&A reductions of at least $150 million over the next 18 months [5][7][11] - The launch of the "Wanna Drive" brand campaign aims to enhance the omnichannel customer experience and drive sales [10][11] - The company plans to continue investing in technology and operational efficiencies to support its growth objectives while maintaining a disciplined approach to pricing [21][56] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the second quarter results fell short of expectations but expressed confidence in the strategy and earnings model, projecting high teens EPS growth with mid-single-digit retail unit growth [5][21] - The management highlighted the importance of being nimble in pricing strategies due to competitive pressures in the market [31][32] - There are concerns about consumer sentiment, particularly among mid to high FICO customers, which may impact sales moving forward [75][94] Other Important Information - The company is committed to reducing SG&A expenses while continuing to invest in initiatives that drive sales [20][47] - The CAF income for the quarter was $103 million, down $13 million from the previous fiscal year, with a loan loss provision of $142 million [13][15] Q&A Session Summary Question: Impact of pull forward in demand on used unit sales - Management indicated that both inventory depreciation and pull forward of demand contributed to the decline in used unit sales, with September showing stronger performance compared to the second quarter [27][28] Question: Pricing strategy and market competitiveness - Management confirmed a renewed focus on competitive pricing, acknowledging that they were less competitive in the previous quarter but are now in a better position [31][32] Question: Update on CAF income expectations - Management revised expectations for CAF income to be flat to slightly down year-over-year due to a larger provision impact this quarter [36][37] Question: SG&A cost reduction areas - Management emphasized that cost reductions would not impact growth strategy and would be reinvested in areas that drive sales, such as marketing [42][47] Question: Consumer sentiment and market conditions - Management noted that consumer sentiment is strained, particularly among mid to high FICO customers, which is affecting app volume and sales [75][94] Question: Reserved inventory policy - Management clarified that reserved inventory is beneficial for customer interest but acknowledged the need to manage how long a vehicle can be held in reserve [99][100]

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $0.22, with first quarter sales declining 6.8% year over year [8][26] - Consolidated gross margin was 45.4%, down 150 basis points compared to last year, driven by lower margins in both segments [26] - Operating earnings were $12.2 million, with an operating margin of 2% [28] Business Segment Data and Key Metrics Changes - Brand Portfolio sales declined 6.9%, while Famous Footwear sales were down 6.3% with comparable sales down 4.6% [20][26] - The Brand Portfolio gross margin was 43.8%, down 280 basis points due to lower initial margins and higher markdown reserves [26] - Famous gross margin was 45.3%, down 80 basis points due to increased promotional days and higher freight costs [26] Market Data and Key Metrics Changes - The company gained market share in women's fashion footwear despite overall sales declines [11] - Famous Footwear saw a 0.5 point market share gain in the kids category, with kids penetration at 21% [21] Company Strategy and Development Direction - The company is focused on controlling costs, optimizing sourcing strategies, and reducing SG&A expenses by $15 million annually [7][34] - The planned acquisition of Stuart Weitzman is seen as a strategic fit, enhancing the company's premium positioning and direct-to-consumer presence [18][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment and emphasized the need to drive growth and profitability [6][7] - The company is cautiously optimistic about back-to-school sales and believes it is well-positioned to gain market share [24][40] Other Important Information - Inventory levels increased by 8.1% year over year, with a significant build for the Jordan brand launch [30] - Cash flow from operations was negative $5.7 million due to lower net income and higher inventory levels [30] Q&A Session Summary Question: How are you thinking about the prices of your portfolio brands moving into the summer and fall? - The company is making selective price increases and managing them in real-time with key partners [38][39] Question: Do you see the weaker brand portfolio brands being restructured or exited? - The company is reviewing its brand portfolio but has no immediate plans for restructuring [40] Question: Is Famous Footwear prepared for back-to-school? - The company is in a good position for back-to-school with no major cancellations reported [41] Question: What adjustments are being made for the $15 million in strategic expense cuts? - The reductions are permanent and structural, expected to begin in the third quarter [43][44] Question: Can you provide more context on the Jordan launch? - The Jordan launch is new, and while initial trends are encouraging, significant marketing will ramp up closer to back-to-school [46][57] Question: How are tariffs impacting your plans? - The company is currently maintaining its sourcing strategy and will adjust as necessary based on tariff developments [48][49] Question: How should we think about inventory reserves and customer credit issues moving forward? - The company believes it has adequately reserved for inventory markdowns and is closely monitoring customer credit ratings [62]