View of a CarMax dealership on April 10, 2025, in Santa Rosa, California.
Justin Sullivan | Getty Images
Actions of CarMax fell 9% on Wednesday after the company beat Wall Street’s quarterly profit expectations and its new CEO detailed a high-level turnaround strategy for the company.
Here’s how the company performed during its fiscal first quarter, compared to average estimates compiled by LSEG:
- Earnings per share: $1.31 versus 95 cents expected
- Income: $8.01 billion versus $7.42 billion expected
Despite the challenges, questions remain about the company’s ability to grow and cut costs under the plan as it faces tougher market conditions. The used vehicle retailer reported pressure on its margins and a decline in its gross margin per used vehicle at retail.
CarMax’s total gross profit was $854.4 million, down 4.4% from last year’s fiscal first quarter. Retail used vehicle gross profit decreased 9.5% and retail gross profit per used unit was $2,177, down $230 from last year’s all-time high, the company said. Its net revenue increased 6.2% from nearly $7.6 billion a year earlier.
CarMax reported net income of $185.6 million, down 11.8% from $210.4 million in the same period last year.
CarMax shares are still up about 25% this year, including an increase of about 16% since Keith Barr, former CEO of InterContinental Hotel Groupstarted running the company on March 16.
Barr said he would release more details about his plan — which is expected to take several years to implement — in late fall, but he noted that leaders are “very confident about it.”
“Our new strategy is focused on great offerings, easy experience, added value, lean management, which, again, will drive long-term sustainable growth, which will create value for our shareholders,” he told CNBC in an interview.
CarMax and Carvana share in 2026.
Barr said he spent his first three months at CarMax better learning the auto industry, understanding the company’s operations and determining potential areas for growth and cost reduction, while aiming to streamline car buying processes for customers.
“There is certainly an opportunity here for significant growth by having a truly integrated, growth-oriented strategy that leverages technology, that leverages our scale, that leverages our stores, that will also provide sustainable growth,” he said.
His first quick changes included making changes to CarMax’s website, such as showing monthly payments; implement an artificial intelligence call agent service; and trying to better streamline the customer experience, from line to store.
Barr was brought in following a massive stock decline that led to pressure on former CEO Bill Nash to resign in November.
Shares of CarMax’s biggest competitor, Carvanawere also down more than 7% as of midday Wednesday, which coincided with the online vehicle retailer revealing its plans for its new franchisee. Stellantis stores. Carvana’s plan calls for using franchise stores to service vehicles and offer test drives, but it will still sell its vehicles exclusively online, even if customers are in the stores.
Barr declined to comment on Carvana’s plans, but said CarMax has found that the vast majority of its used vehicle customers still like to visit stores and see the vehicle they are considering purchasing before they do so.