CarMax, Inc (NYSE:KMX) stock fell 0.38% (As on Apr 13, 11:20:44 AM UTC-4, Source: Google Finance) after the company’s fourth-quarter used vehicle sales missed analyst estimates, with soaring prices and anxiety over the economy keeping some customers away. The company cited declining consumer confidence and affordability, among other factors, for a 6.5% drop in the number of used cars it sold last quarter in stores that have been open at least 13 months. The average price of a car rose 40%, or $8,300, in the period ended Feb. 28 compared with a year ago. The results are yet another sign that higher costs and worries about the economy are starting to take a toll on consumer behavior. Used car prices have been a major contributor to elevated inflation readings, though they have begun to slip this year.
KMX in the fourth quarter of FY 22 has reported the adjusted earnings per share of 98 cents, missing the analysts’ estimates for the adjusted earnings per share of $1.23. The company had reported the adjusted revenue of $7.69 billion in the fourth quarter of FY 22, beating the analysts’ estimates for revenue of $7.58 billion. Combined retail and wholesale used vehicle unit sales were 343,413, an increase of 11.3% from the prior year’s fourth quarter. Online retail sales accounted for 11% of retail unit sales, compared with 5% in the fourth quarter of last year. Revenue from online transactions, including retail and wholesale unit sales, was $2.4 billion, or approximately 31% of net revenues, compared with 17% of net revenues in last year’s fourth quarter.
Moreover, the total gross profit increased to $711.0 million, up 10.9% versus last year’s fourth quarter. Retail used vehicle gross profit declined 0.2%, reflecting the combined effects of the decline in retail unit sales and an improvement in the related gross profit per unit, which rose $109 to $2,195. Wholesale vehicle gross profit increased 73.0% versus the prior year’s quarter, reflecting both the growth in unit volume and an increase in the related gross profit per unit, which rose $201 to $1,191. Service margins declined primarily due to the deleverage resulting from the decline in retail unit sales together with the adverse effects on technician staffing and reconditioning efficiency from the fourth quarter COVID surge.
Further, the company said it plans to open 10 stores in fiscal 2023. This includes the company’s planned entry into the New York metro market.
The company is expecting capital expenditures to increase to about $500 million in fiscal 2023 from $308.5 million in fiscal 2022.