CarMax (KMX 78.75, +3.12) traded higher by 4.1% pre-market after
reporting better than expected results for the second quarter.
The used car dealership reported above-consensus second quarter earnings of $1.24 per share on an 8.6% year/year increase in revenue to $4.77 bln, which was also ahead of estimates.
Used vehicle sales grew 7.6% to $3.98 bln while unit sales rose 5.8% to 196,880. The average selling price for used vehicles grew 1.7% to $20,005 from $19,667 one year ago.
Wholesale unit sales grew 14.6% due to higher appraisal traffic, growth in the company's store base, and a higher appraisal buy rate. The average selling price for wholesale vehicles was little changed at $4,955.
Used vehicle gross profit per unit was little changed at $2,179 while wholesale vehicle gross profit per unit declined to $919 from $950.
Comparable sales increased 2.1%, mostly due to improved conversion, which was partially offset by lower store traffic. CarMax believes the improvement in conversion was fueled by solid performance of store sales teams and contributions from the company's digital initiatives.
CarMax Auto Finance income grew 1.6% to $109.7 mln due to an 8.6% increase in average managed receivables, a higher provision for loan losses, and a slightly lower total interest margin percentage, which dipped to 5.7% from 5.8% one year ago. The allowance for loan losses as a percentage of ending managed receivables showed no sequential change but declined to 1.13% from 1.15% one year ago.
The company opened three locations during the quarter. Two stores were opened in existing television markets while one store was opened in the Macon, Georgia television market. The company plans to open 15 new stores over the next year with ten openings planned for new television markets.
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