RICHMOND, VA – For the second quarter ending August 31, 2005, CarMax, Inc. raised comparable store used unit sales expectations to growth of approximately 10%, and raised earnings per share expectations to approximately 37 cents.
On June 20, CarMax had estimated second quarter comparable store used unit sales growth in a range of 3 to 9% and earnings per share in a range of 29 to 34 cents.
"During our second quarter, our consumer-preferred market offer and continuing strong execution in our stores have allowed us to take advantage of the increase in customer traffic we have seen during the quarter," said Austin Ligon, president and chief executive officer. "Traffic is up compared with the second quarter of last year, at least partly due to the increase in consumer interest and appraisal traffic generated by new-car employee pricing programs," Ligon said.
"As a result, our sales pace has increased from the rate we were seeing in early June. We believe the employee pricing programs have also clarified dealer new car pricing, which usually works to CarMax's benefit. "While wholesale auction prices for larger SUVs and trucks have plummeted, wholesale auction prices for other vehicles are still above historical norms," said Ligon. "We continue to keep our appraisal offers consistent with broader market trade-in offers, employing the lessons we learned during the more challenging periods last year and this spring. Doing so has enabled us to keep our retail pricing attractive to consumers. We also are keeping our inventories closely aligned with our sales pace. In addition, we currently expect CarMax Auto Finance income to be higher than original expectations as CAF has benefited from increased penetration," said Ligon. "This increase is being driven in part by a rise in finance applications from prime-rated customers."