CarMax 1Q profit up 21% in Q1

Richmond: Car dealership chain CarMax said on Friday that higher sales of used cars drove its first-quarter profit up more than 21 per cent. Revenue grew 19 per cent, but its expenses grew 14 per cent.

The earnings and revenue results beat Wall Street expectations, sending its shares up initially before giving ground in the afternoon.

The Richmond, Virginia-based company, which runs more than 120 stores in 61 markets that mainly sell used cars and trucks, reported earnings of $146.7 million (Dh538.6 million), or 64 cents per share, for the three-month period ending May 31, up from $120.7 million, or 52 cents per share, a year ago.

Revenue grew 19 per cent to $3.31 billion.

Analysts polled by FactSet expected earnings of 58 cents per share on revenue of $3.17 billion.

Its shares rose two cents to close at $44.59 on Friday after rising as high as $48.10 earlier. That was near its 52-week high of $48.86.

Sales at stores open at least one year rose 17 per cent. The figure is a key metric because it strips out the impact of newly opened and closed locations.

CarMax noted that it has benefited from a better consumer credit environment, with about 90 per cent of its customers receiving a financing offer from one of its lenders.

Used vehicle unit sales rose 22 per cent as the company’s average selling price rose more than a per cent to $19,540. Wholesale vehicle unit sales increased six per cent during the quarter. New vehicle unit sales, which make up a smaller part of CarMax’s business, fell 7.5 per cent. Other revenue, which includes fees it receives from third-party lenders its customers use, increased more than four per cent.