Key Highlights
- CarMax reported a fourth-quarter net loss of $120.7 million, or 85 cents per share, following a $141.3 million goodwill impairment charge.
- Shares declined 6.8% during premarket hours on Tuesday.
- Adjusted earnings per share reached $0.34, surpassing the analyst consensus of $0.18; quarterly revenue totaled $5.95 billion, exceeding forecasts of $5.65 billion.
- Retail gross profit per used unit declined to $2,115 from $2,322 year-over-year; wholesale profit per vehicle decreased to $940 from $1,045.
- The company intends to launch four new stores and four reconditioning/auction centers in fiscal 2027, allocating approximately $400 million in capital expenditures.
CarMax (KMX) shares tumbled 6.8% during premarket trading Tuesday following the used-vehicle retailer’s announcement of a fourth-quarter net loss accompanied by a $141.3 million goodwill impairment charge.
The Richmond, Virginia-headquartered company recorded a net loss of $120.7 million, or 85 cents per share, during the quarter. This stands in contrast to the $89.9 million profit, or 58 cents per share, achieved during the corresponding period last year.
When accounting for the goodwill charge, the financial performance takes on a different appearance. Adjusted earnings reached 34 cents per share — significantly exceeding the 18-cent analyst consensus.
Quarterly revenue totaled $5.95 billion, representing a 1% decline year-over-year while surpassing the $5.65 billion analyst expectations.
Market observers tracking the stock anticipated the goodwill writedown. CarMax attributed the charge to a substantial decline in market capitalization, diminished financial performance throughout fiscal 2026, and adjustments to long-term projections.
Profit Margins Face Headwinds
Used-vehicle margins experienced further deterioration. Retail gross profit per unit decreased to $2,115 during the quarter, down from $2,322 in the prior-year period. Wholesale gross profit per vehicle fell to $940 from $1,045 during the same timeframe.
The company implemented price reductions to accelerate inventory turnover. This strategy yielded partial success — wholesale unit sales increased 3% to 122,781 vehicles. However, average wholesale prices decreased approximately $270 per unit, diminishing profitability gains.
Retail used vehicle unit sales declined 0.8% year-over-year to 181,188 units. Comparable store sales fell 1.9%. Average retail selling prices dropped roughly $110 per vehicle.
Combined retail and wholesale volume remained essentially unchanged, rising just 0.7% to 303,969 units.
Consumer demand patterns have also created challenges. Gasoline prices approaching $4 per gallon have affected buyer sentiment. This environment has driven increased interest in electric and hybrid vehicles, altering demand dynamics within the used car marketplace.
Leadership Transition Brings Fresh Strategy
New President and CEO Keith Barr delivered his inaugural quarterly report with a focus on operational transformation.
“We are moving with urgency to improve execution, drive efficiencies, and sharpen our customer offering,” Barr stated. He identified competitive pricing and vehicle selection as primary strategies CarMax will deploy to attract customers.
Barr emphasized that the objective centers on establishing CarMax as “the obvious choice for customers” by delivering superior pricing, extensive inventory, and an enhanced customer journey.
Looking toward fiscal 2027, CarMax announced plans to establish four new stores and four additional reconditioning and auction facilities. The company expects capital expenditures of approximately $400 million.
Full-year quarterly revenue decreased 1% to $5.95 billion.
Adjusted full-year earnings per share fell to 34 cents from 64 cents in the previous year, underscoring the challenging margin landscape facing the business.
