On April 10, 2025, CarMax Inc (KMX, Financial) released its 8-K filing detailing the financial results for the fourth quarter and fiscal year ending February 28, 2025. The company reported net revenues of $6.0 billion, exceeding the analyst estimate of $5,962.89 million. However, the earnings per share (EPS) of $0.58 fell short of the estimated $0.68.
Company Background
CarMax Inc (KMX, Financial) is the largest used-vehicle retailer in the United States, operating approximately 250 retail stores. Founded in 1993 as a unit of Circuit City, it became an independent company in 2002. The company primarily generates revenue from used-vehicle sales, which accounted for 79% of revenue in fiscal 2024, with wholesale operations contributing 19%. CarMax is headquartered in Richmond, Virginia, and aims to increase its market share of vehicles aged 0-10 years from 3.7% in 2023 to over 5% in the coming years.
Performance and Challenges
CarMax Inc (KMX, Financial) achieved a 6.7% increase in net revenues for the fourth quarter, driven by a 6.2% rise in retail used unit sales and a 3.1% increase in wholesale units. The company's total gross profit rose by 13.9% to $667.9 million, supported by strong unit volumes and margin performance. However, the EPS of $0.58, despite an 81.3% increase from the previous year, was impacted by a $12 million non-cash lease impairment related to Edmunds.
Financial Achievements
CarMax Inc (KMX, Financial) reported a record gross profit per retail used unit of $2,322, an increase of $71 per unit. The company also saw a significant increase in vehicles purchased from consumers and dealers, up 15.3% from the previous year. CarMax Auto Finance (CAF) income grew by 8.2% to $159.3 million, driven by an improved net interest margin percentage.
Key Financial Metrics
The company's SG&A expenses increased by 5.1% to $610.5 million, reflecting higher compensation and benefits costs. However, SG&A as a percentage of gross profit decreased by 770 basis points to 91.4%, indicating effective cost management. The allowance for loan losses decreased to 2.61% of ending managed receivables, down from 2.70% in the previous quarter.
“We are pleased with the continuing momentum across our diversified business during the fourth quarter. We delivered robust EPS growth driven by increases in unit sales and buys, strong growth in total gross profit, an increase in CAF income, and ongoing management of SG&A,” said Bill Nash, president and chief executive officer.
Analysis and Outlook
CarMax Inc (KMX, Financial) demonstrated resilience in the face of market challenges, achieving significant revenue growth and maintaining strong gross profit margins. The company's strategic focus on expanding its market share and enhancing its consumer offering positions it well for future growth. However, the shortfall in EPS compared to analyst estimates highlights the need for continued vigilance in managing costs and optimizing operations.
| Metric | Q4 2025 | Q4 2024 | Change |
|---|---|---|---|
| Net Revenues | $6.0 billion | $5.63 billion | 6.7% |
| EPS | $0.58 | $0.32 | 81.3% |
| Gross Profit | $667.9 million | $586.5 million | 13.9% |
CarMax Inc (KMX, Financial) continues to leverage its robust business model and operational efficiencies to drive growth. The company's focus on expanding its store network and enhancing its digital capabilities is expected to support its long-term objectives. As the largest used-vehicle retailer in the U.S., CarMax remains well-positioned to capitalize on opportunities in the evolving automotive retail landscape.
Explore the complete 8-K earnings release (here) from CarMax Inc for further details.
