The Low Post News

CarMax Reports Spike in Profit

On Friday, CarMax reported a jump of 16% in earnings for the first quarter. The chain of dealerships of used cars continued opening new locations at the fastest rate to date and expanded its footprint across the United States.

The quarterly results easily exceeded estimates on Wall Street and its shares were up over 14% in Friday trading.

CarMax Inc, which operates nearly 135 stores that for the most part sell cars and trucks that are used, earned over $169.5 million equal to 76 cents a share, during the period that ended on May 31.

That was up from last year during the same period when sales reached $146.6 million equal to 64 cents a share.

The company said its revenue was up 13% to end the quarter at $3.75 billion. Analysts had expected earnings to be 67 cents a share on $3.59 billion in revenue.

Sales at stores that were open for 13 months or more were up 3.4%. That is an important metric since it takes away the volatility of stores that have just opened and those locations that recently closed.

CarMax added four more stores during the three-month period including three in markets that were new. It is planning to open another 13 during 2014 and 10 and 15 in the next two fiscal years.

CarMax touted recent successes that were highlighted in the efforts of the company to lower expenses, improve execution, traffic and its gross margins to put it into position for more growth.

Sales of used vehicles were up close to 10% as the average sales price at the company increased over 3% to just over $20,170.

Sales of wholesale vehicles were up 10% during the three-month period.

Sales of new vehicles, which represent a smaller portion of the business of CarMax was up 33%. Other forms of revenue, which includes the fees received from its third party lenders that the customers use increased by 2% during the quarter.

Income from the auto-financing arm of the company was up close to 9% to more than $94.6 million during the quarter due to increased financing of vehicles for customers.

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