"In the fourth quarter, we experienced the strongest sales growth of the fiscal year. Stronger sales occurred both in our more established stores and in our newer superstores, as well as in all our geographic regions. All regions benefited from the seasonal increase in subprime-financed sales that we discussed in our February 22 news release, and all regions also benefited from additional strength in used car sales overall," said Austin Ligon, president and chief executive officer.
As anticipated by the company on February 22, subprime-financed sales contributed an incremental 5 percentage points to comparable store used unit growth in the fourth quarter. CarMax rolled out subprime financing to its full superstore base in August 2004.
"Even during our first and second quarters, when sales performance was disappointing, we believe we continued to gain market share," Ligon said. "For the fiscal year, our used-unit comp growth of 1 percent compares with the estimated industry used-car unit decline of approximately 2 percent in 2004 and a used-unit comp performance by the publicly traded new car retailers that we estimate averaged approximately minus 5 percent in 2004.
"We now expect fourth quarter earnings to be approximately 28 cents per share, up about 33 percent from fourth quarter EPS last year, " said Ligon. CarMax reported fourth quarter earnings per share of 21 cents in the prior year, which included approximately 1 cent realized from the sale of a new car franchise.
CarMax opened one superstore during the fourth quarter, a satellite superstore in the Miami market on December 1. The company opened nine superstores in fiscal 2005, an 18 percent increase in the used car superstore base. In December, CarMax announced that in fiscal 2006, ending February 28, the company expects to open nine superstores, a 16% increase in its used car superstore base.
During the fourth quarter, the company returned to the manufacturer its two remaining Mitsubishi franchises, one at its Dulles superstore in northern Virginia and one in Kenosha, Wis. Following these actions, CarMax has seven new car franchises, consisting of three Chrysler franchises, two Toyota franchises, one Nissan franchise, and one Chevrolet franchise. The company plans to operate this core group of new car franchises for the foreseeable future.