CarMax, Inc (NYSE:KMX) stock rose 3.92% (As on September 29, 11:16:09 AM UTC-4, Source: Google Finance) though the company posted a lower-than-expected quarterly profit, hurt by weakening demand for preowned vehicles. Preowned vehicles’ demand, which was strong during the pandemic, has fallen, as consumers opt for newer models with attractive financing deals and safety technology. The cooling used vehicle demand, coupled with inflationary headwinds, has caused car retailers to take a dent to their profit by selling cars for lower prices than what they acquired them for. CarMax last year implemented several measures to trim costs including slowing down on car purchases for its inventory, pausing some hiring and halting share buybacks. The company also said that it planned to resume share repurchases in the third quarter this year.

KMX in the second quarter of FY 24 has reported the adjusted earnings per share of 75 cents, missing the analysts’ estimates for the adjusted earnings per share of 78 cents, according to LSEG data. The company had reported 13.1 percent fall in the adjusted revenue growth to $7.07 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of $7.03 billion. Combined retail and wholesale used vehicle unit sales were 342,662, a decrease of 9.0% from the prior year’s second quarter. Online retail sales accounted for 14% of retail unit sales, compared with 11% in the second quarter of last year. Revenue from online transactions, including retail and wholesale unit sales, was $2.2 billion, or approximately 31% of net revenues, up from 30% in last year’s second quarter. Total retail used vehicle unit sales declined 7.4% to 200,825 compared to the prior year’s second quarter. Comparable store used unit sales declined 9.0% from the prior year’s second quarter, a sequential improvement from the year-over-year declines in the second half of last year and this year’s first quarter. Total retail used vehicle revenues decreased 11.0% compared with the prior year’s second quarter, driven by the decrease in retail used units sold as well as a decrease in average retail selling price, which declined approximately $1,200 per unit, or 4.0%.

Total wholesale vehicle unit sales decreased 11.2% to 141,837 versus the prior year’s second quarter, a sequential improvement from the year-over-year declines in the second half of last year and this year’s first quarter. Total wholesale revenues decreased 21.8% compared with the prior year’s second quarter due to a decrease in the average wholesale selling price of approximately $1,300 per unit or 12.3% and the decrease in wholesale units sold.