Core Insights - BML Capital Management disclosed a new position in CarMax, acquiring 155,000 shares valued at approximately $5.99 million [1][2] - The new position represents 5.18% of BML Capital's reported 13F assets under management [3] Company Overview - CarMax is a retailer of used vehicles in the United States, utilizing a nationwide footprint and a multi-channel sales approach [6] - The company reported a revenue of $25.94 billion and a net income of $457.84 million [4] - As of February 2, CarMax's market capitalization was $6.58 billion, with shares priced at $44.78, reflecting a 46.84% decline over the past year [3][4] Financial Performance - CarMax's third-quarter results indicated a decline in retail used unit sales by 8% year over year and comparable sales down 9% [11] - Earnings per share fell to $0.43 from $0.81 a year earlier, with gross profit per retail unit declining to $2,235 [11] - Despite lower volumes, CarMax generated $590 million in gross profit and $174.7 million in income from CarMax Auto Finance, which grew over 9% year over year [12] Strategic Initiatives - Management is targeting at least $150 million in SG&A run-rate savings by fiscal 2027 while continuing aggressive stock buybacks, having repurchased $201.6 million of stock in the last quarter [12] - BML Capital's investment in CarMax indicates a structural choice to allocate capital to a cash-generative retailer amidst a portfolio dominated by early-stage biotech and asymmetric growth names [10]

Core Viewpoint - Hutchinson Capital Management has completely exited its position in CarMax, liquidating approximately $9.96 million worth of shares during the third quarter of 2025, indicating a significant shift in investment strategy towards the company [1][2][7]. Company Overview - CarMax, Inc. operates a nationwide network of stores providing a wide range of automotive products and services, including in-house financing and vehicle repair services [6]. - The company's revenue for the trailing twelve months (TTM) is reported at $27.79 billion, with a net income of $521.07 million [4]. Financial Performance - As of November 11, 2025, CarMax shares were priced at $34.14, reflecting a one-year price decline of 55.54% [3][4]. - The company's stock has underperformed the S&P 500 by 69 percentage points over the past year [3]. Market Challenges - CarMax is facing significant challenges, including a 6% year-over-year decline in revenue over the past three years, attributed to macroeconomic weakness and reduced demand for used cars [14]. - Increased competition from online-first competitors like Carvana has further pressured CarMax's market share [14]. - Higher interest rates have led to increased monthly payments for consumers, causing them to retain their existing vehicles longer, which negatively impacts CarMax's sales [14].

Core Insights - CarMax reported strong financial results for Q1 FY 2026, with total revenue of $7.55 billion, a 6% increase from the previous year, and adjusted earnings per share of $1.38, up 42% [2][4]. Financial Performance - Total revenue increased from $7.11 billion in Q1 FY 2025 to $7.55 billion in Q1 FY 2026, representing a 6% growth and beating expectations [2]. - Adjusted earnings per share rose from $0.97 to $1.38, marking a 42% increase and also exceeding expectations [2]. - Retail used vehicle unit sales grew by 9%, from 211,132 units to 230,210 units [2]. - The average price of used vehicles decreased slightly by 1.5%, from $26,526 to $26,120 [2]. Business Operations - Total vehicle unit sales increased nearly 6% year over year, driven by strong retail performance, with comparable store used unit sales up 8.1% [3]. - CarMax purchased 336,000 vehicles during the quarter, a 7% increase, and revenue from extended protection plans rose by 11% [3]. - The company emphasized effective expense management and stronger gross profit figures as key factors in its earnings growth [4]. Market Reaction - Following the positive financial report, CarMax shares surged nearly 11% in premarket trading, indicating strong investor confidence [6]. - The stock had been trading near two-year lows, with concerns about consumer sentiment, but the results suggested resilience in consumer purchasing behavior [7]. Strategic Initiatives - CarMax opened two new stand-alone centers for auctions and vehicle reconditioning in Phoenix and Dallas, aimed at supporting strong market conditions in those regions [8]. - The company accelerated its stock repurchase program, spending $200 million to buy back approximately 3 million shares, leaving $1.74 billion available for future repurchases, reflecting confidence in ongoing favorable industry conditions [9].