CarMax Inc (KMX) Q2 2024 Earnings: A Mixed Bag Amid Market Pressures
CarMax Inc (NYSE:KMX) recently held its second quarter fiscal year 2024 earnings release conference call. Despite the widespread pressures that have been affecting the company over the past year, CarMax has reported sequential quarterly improvement across its business. The company's deliberate steps to control what it can are supporting its business now while also positioning it well for the future. This quarter, CarMax delivered strong retail GPU, reduced SG&A year over year, maintained used sellable inventory units at a similar level to the first quarter, drove strong wholesale GPU despite experiencing steep depreciation, and stabilized CAF's net interest margins while maintaining penetration.
Financial Performance
For the second quarter of FY '24, CarMax's diversified business model delivered total sales of $7.1 billion, down 13% compared to last year, driven by lower retail and wholesale volume and prices. In the retail business, while total unit sales declined 7.4% and used unit comps were down 9%, the company continued to achieve sequential quarterly improvement. Average selling price declined approximately $1,200 per unit or 4% year over year. Retail gross profit per used unit was $2,251, similar to last year's second quarter record high of $2,282.
Wholesale and Online Metrics
Wholesale unit sales were down 11.2% versus the second quarter last year. Average selling price declined approximately $1,300 per unit or 12% year over year. Wholesale gross profit per unit was $963, up from $881 a year ago. Regarding the second quarter online metrics, approximately 14% of retail unit sales were online, up from 11% last year. Approximately 55% of retail unit sales were omni sales this quarter, up from 53% in the prior year. Total revenue resulting from online transactions was approximately 31%, up slightly from 30% last year.
CarMax Auto Finance (CAF)
CarMax Auto Finance (CAF) delivered income of $135 million, down from $183 million during the same period last year. The loan loss provision in Q2 of $90 million results in an ending reserve balance of $538 million or 3.08% of ending receivables. This is compared to a reserve of $535 million last quarter, which was 3.11% of receivables.
Future Outlook
CarMax believes the steps it is taking in response to the current environment are supporting its business in the near-term while also positioning it well for the long run. The company will continue to focus on delivering what it believes is the most customer-centric experience in the industry as it prioritizes initiatives that drive operational efficiencies and make its omni channel experience faster, simpler, and more seamless for its associates and customers.
This article first appeared on GuruFocus.
