CarMax, Inc (NYSE:KMX) stock fell 6.31% (As on April 12, 11:14:08 AM UTC-4, Source: Google Finance) after the company posted fourth-quarter profit above analysts’ estimates as cost cutting measures helped the pre-owned car retailer soften the blow from a slowdown in demand for vehicles. CarMax had in December implemented a series of measures to help cut costs, such as slowing down on acquiring cars for its inventory, trimming marketing and capital expenses, and pausing hiring for its corporate office. Demand for used cars was dented over the past year due to higher borrowing costs and soaring commodity and gasoline prices, weighing on CarMax’s results. However, with leasing rates on the rise and new-car prices nearing the $50,000 mark, most consumers have no choice but to seek options in the used-car market, sustaining some demand.

KMX in the fourth quarter of FY 23 has reported the adjusted earnings per share of 44 cents, beating the analysts’ estimates for the adjusted earnings per share of 24 cents, according to Refinitiv IBES estimates. The company had reported 25.6 percent decline in the adjusted revenue to $5.7 billion in the fourth quarter of FY 23, missing the analysts’ estimates for revenue of $6.04 billion. Combined retail and wholesale used vehicle unit sales for the quarter were 290,214, a decrease of 15.5% from the prior year. Online retail sales accounted for 14% of retail unit sales, compared with 11% in the fourth quarter of last year. Revenue from online transactions, including retail and wholesale unit sales, was $1.7 billion, or approximately 30% of net revenues, compared to 31% of net revenues in 4Q 2022.

Moreover, retail used unit sales declined 12.6% in the fourth quarter, and comparable store used unit sales declined 14.1%; wholesale units declined 19.3% in the fourth quarter. Delivered robust margins in retail and wholesale; gross profit per retail unit of $2,277, an increase of $82 per unit versus last year’s fourth quarter, and gross profit per wholesale unit of $1,187, relatively flat compared to the prior year’s record. The company bought 262,000 vehicles from consumers and dealers, down 22.5% versus last year’s record fourth quarter and sequentially up 10.1% from this year’s third quarter.

The company affirmed its long-term financial targets to sell between 2 million and 2.4 million vehicles through its combined retail and wholesale channels by fiscal 2026, generate between $33 billion and $45 billion in revenue by fiscal 2026, and grow its nationwide share of the age 0-10 used vehicle market to more than 5% by the end of calendar 2025.