Falling used-car demand as inflation and high interest rates squeeze wallets is prompting CarMax to cut costs after reporting missed second-quarter analyst earnings estimates.
The report of falling year-over-year sales volume and profit sent CarMax’s shares down 25% after the earnings report Thursday, a plummet that reverberated among the share prices of sector competitors, including Carvana.
CarMax executives said affordability concerns among prospective buyers built over the year. President and CEO Bill Nash tried to put a positive spin on the results, saying, “While this was a challenging quarter across the used car industry, our ongoing progress in strengthening and expanding our omnichannel experience continues to positively differentiate us and enable us to grow market share.
“As we navigate the near-term pressures facing our industry, we are further sharpening our focus on driving additional operational efficiencies across our business. We will also remain focused on continuing our work to achieve our long-term goals, including further improving our omnichannel experience for our customers and associates through enhancing the seamlessness of our online and in-store offerings and growing our diversified business model."
CarMax’s year-over-year retail sales dropped 8.9% in the six months ending Aug. 31. Its net income fell 56% to $125.9 million. Same-store sales decreased 8.3% during the summer.
The company said it’s offering more lower-priced vehicles to answer affordability concerns while cutting expenses via attrition-enabled staff cuts, postponed corporate hiring and other measures.
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