Used-car dealership chain CarMax 3Q profit up

2013-12-26T00:00:00Z Used-car dealership chain CarMax 3Q profit upMICHAEL FELBERBAUM AP Business Writer
December 26, 2013 12:00 am  • 

RICHMOND, Va. | CarMax Inc. said Friday that higher sales drove the used-car dealership chain's third-quarter profit up more than 12 percent.

But its earnings were short of analysts' expectations, and it shares fell sharply.

The Richmond, Va.-based company, which runs nearly 130 stores in 64 markets that mainly sell used cars and trucks, reported earnings of $106.5 million, or 47 cents per share, for the three-month period ended Nov. 30. That's up from $94.7 million, or 41 cents per share, a year ago. Revenue grew 13 percent to $2.94 billion.

Analysts polled by FactSet expected earnings of 48 cents per share on revenue of $2.91 billion.

Used vehicle unit sales rose 15 percent as the company's average selling price rose less than a percent to $19,469. Wholesale vehicle unit sales increased 4 percent during the quarter. New vehicle unit sales, which make up a smaller part of CarMax's business, grew 6.6 percent. Other revenue, which includes fees it receives from third-party lenders its customers use, fell 5 percent.

Its total gross profit — its profit after reconditioning and other costs — grew 11 percent during the quarter.

Gross profit per used vehicle sold remained steady at $2,149 while wholesale gross profit per vehicle fell $36 to $887.

Income from CarMax's auto financing arm rose nearly 16 percent to $83.9 million in the quarter as it financed more of its customers' vehicles.

Expenses increased 11 percent to $284.4 million as the company's store base grew 12 percent and spent more on selling costs due to higher sales.

The company also said Friday it plans to open 14 stores in the next calendar year. CarMax said it repurchased 300,000 shares of stock for $14.8 million during the quarter.

Its shares fell $4.51, or about 8.5 percent, to $48.54 in morning trading Friday.

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