RICHMOND, VA – CarMax, Inc. has reported record sales for the third quarter ended November 30. Total sales increased 13 percent to $1.22 billion from $1.07 billion in the same period last year. Total used-unit sales grew 15 percent for the quarter. Comparable store used unit sales rose 2 percent for the quarter. The company now expects third quarter earnings of approximately 17 cents per share. The company announced plans to open approximately nine used-car superstores in the next fiscal year, expanding its superstore base by approximately 16 percent.
"As we noted in our November 16 release, our third quarter used-car sales trends were stronger than the performance we experienced during the late spring and summer," said Austin Ligon, president and chief executive officer. "In the quarter, used-car wholesale prices fell in line with what we generally see during the autumn model-year-changeover period, and we believe this contributed to the stronger sales performance. We also believe we recovered some of the sales lost during the second quarter to severe weather in Florida and the southeastern U.S. In addition, as we originally expected, DRIVE Financial Services, a new finance provider focused on subprime customers, contributed approximately 3 percent to used unit comps."
"For the third quarter, we now expect earnings per share of approximately 17 cents, which includes a benefit of about 1 cent from the adjustment in the valuation of our retained interests in securitized receivables," Ligon said. "We plan to offer guidance for our fourth quarter and current fiscal year when we release third quarter earnings on December 17."
CarMax opened two superstores during the third quarter, entering the Albuquerque, N. M., market with a standard superstore and adding a satellite superstore in Richmond, Va. CarMax also opened a satellite superstore in the Miami market on December 1. The company has opened nine superstores thus far in fiscal 2005, an increase of 18 percent in the used-car superstore base. No additional superstore openings are planned during the balance of the fiscal year. During the third quarter, the company completed the sale of its Ford franchise in Kenosha, Wis., and returned its Mitsubishi franchise in Atlanta to the manufacturer. In addition, the company expects to return its remaining two Mitsubishi franchises to the manufacturer in the fourth quarter, one at its Dulles superstore in northern Virginia and one in Kenosha. Following these actions, CarMax will have seven new-car franchises, including 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.
During the fiscal year ending February 28, 2006, the company plans to expand its used-car superstore base by approximately 16 percent, consistent with CarMax´s used-car superstore annual growth target in the range of 15 to 20 percent. The company expects to open approximately nine used-car superstores, including five standard superstores and four satellite superstores. Planned entries into mid-sized markets include Jacksonville, Fla.; Salt Lake City, Utah; Wichita, Kan.; and Virginia Beach, Va. Satellite superstore additions are planned for Independence, Mo.; Miami; and Nashville, Tenn. CarMax also plans to add one standard and one satellite superstore to the Los Angeles market, bringing the total number of stores in this large market to five.
