<div id="readability-page-1"><p>CarMax Inc ((KMX)) has held its Q3 earnings call. Read on for the main highlights of the call.</p><h3>Claim 50% Off TipRanks Premium and Invest with Confidence </h3><ul><li>Unlock  hedge-fund level data  and  powerful investing tools  designed to help you make smarter, sharper decisions  </li><li> Stay ahead of the market with  the latest news and analysis  so your portfolio is always positioned for maximum potential</li></ul> <p>CarMax Earnings Call Reveals Tough Market, Focus on Cost Cuts and Digital Push</p> <p>CarMax’s latest earnings call painted a picture of a company under real pressure from softer demand, weaker unit volumes, and margin compression, but also one that is actively reshaping its cost base and doubling down on digital capabilities and its in‑house finance arm. Management acknowledged declines in sales and profitability and persistent pricing headwinds, while emphasizing initiatives in omnichannel retail, expense reduction, and CarMax Auto Finance as levers to stabilize performance over the next few years. The overall tone was cautious, with limited near-term visibility, but not without strategic optimism.</p> <h2>Digital and Omnichannel Development</h2> <p>CarMax continued to lean heavily into its digital and omnichannel strategy, highlighting significant investments in technology that allow customers to shop how and where they want—online, in-store, or a hybrid of both. Management stressed that enhancing the digital shopping experience is central to driving better conversion rates and capturing demand in a softer used-car market. The company is refining its online tools, streamlining the digital journey, and tying these capabilities tightly to its physical footprint, aiming to create a seamless end-to-end experience that can differentiate CarMax from traditional dealers and purely online competitors.</p> <h2>SG&amp;A Cost Reduction Goal</h2> <p>A major theme of the call was cost discipline, with CarMax targeting at least $150 million in SG&amp;A savings by the end of fiscal 2027. A key action already taken is a 30% reduction in its Customer Experience Center (CEC) workforce, which management framed as both a cost-saving step and a move to better align resources with the company’s evolving omnichannel model. The broader SG&amp;A program includes simplifying operations, leveraging technology to reduce manual work, and trimming non-essential spending. These efforts are designed to protect profitability in a lower-volume environment and build a leaner platform for growth when demand recovers.</p> <h2>CarMax Auto Finance Growth</h2> <p>CarMax Auto Finance (CAF) stood out as a relative bright spot, posting a 9% year-over-year increase in income to $175 million for the quarter. The company noted continued expansion across the full credit spectrum, signaling that CAF is becoming an increasingly important contributor to overall profitability. By capturing more financing in-house, CarMax can deepen its economics per sale and potentially offset some of the pressure from weaker retail margins. Management indicated that CAF, along with ancillary products, is a key strategic pillar as the company navigates a challenging sales backdrop.</p> <h2>Decline in Total Sales</h2> <p>The headline numbers underscored the demand slowdown: total sales fell 6.9% year-over-year, with retail unit sales down 8% and used unit comparable sales declining by 9%. These figures highlight the intensity of the headwinds facing the used-auto sector, including affordability constraints for consumers and heightened competition on price. CarMax’s large-scale, national model provides reach and brand recognition, but the call made clear that volume softness is weighing heavily on overall performance and will remain a core challenge in the near term.</p> <h2>Wholesale and Retail Price Pressures</h2> <p>Wholesale and retail pricing dynamics were another source of pressure. Wholesale unit sales declined 6.2%, and average wholesale selling prices slipped by about $40 per unit, reflecting a weaker wholesale environment. On the retail side, the average selling price rose only because acquisition costs were higher, not because CarMax was able to push through meaningful price increases. This combination—higher acquisition costs, limited pricing power, and softer volumes—contributes to margin compression and forces the company to be more surgical in how it buys, prices, and turns inventory.</p> <h2>Earnings and Profitability Challenges</h2> <p>Profitability deteriorated sharply, with net earnings per diluted share dropping to $0.43 from $0.81 a year earlier. Management pointed to restructuring expenses and workforce reductions as notable factors, layered on top of the operational pressure from lower sales and tighter margins. While some of these costs are one-time in nature, they underscore the extent of the restructuring underway. The company’s strategy is to absorb this near-term earnings hit in order to reset its cost structure and position the business for improved leverage when revenue trends stabilize.</p> <h2>Challenges in Inventory and Costs</h2> <p>CarMax also acknowledged that its higher average selling prices have made vehicles less attractive to price-sensitive buyers, intensifying the need to adjust its approach to inventory and margins. The company plans to lower margins to become more competitive on pricing, while simultaneously conducting a comprehensive review of its overall cost of goods sold and operating expenses. The goal is to find efficiencies without undermining the customer value proposition, enabling CarMax to offer sharper prices and still protect returns. This recalibration of pricing and cost management is central to regaining traction in unit volumes.</p> <h2>Forward-Looking Guidance and Strategic Priorities</h2> <p>Looking ahead, CarMax’s guidance and commentary reflect a cautious but proactive stance. The company reported quarterly sales of $5.8 billion, down 6.9% from the prior year, and an average used vehicle selling price of $26,400, up $230 year-over-year, alongside the EPS decline to $0.43. To counter these trends, CarMax plans to lower margins to improve competitiveness, increase marketing investments to support traffic and sales trends, and deliver at least $150 million in SG&amp;A savings by fiscal 2027. Management also aims to further leverage CAF and ancillary products to bolster profitability and is reassessing its cost structure, including COGS and digital platform enhancements, to create a more streamlined, efficient customer experience. Together, these initiatives form the backbone of CarMax’s recovery playbook in an uncertain demand environment.</p> <p>In summary, CarMax’s earnings call underscored a difficult quarter marked by falling sales, margin pressures, and a sharp drop in earnings, but also highlighted decisive moves on costs, digital capabilities, and in-house financing. Investors will be watching closely to see whether margin cuts, marketing spend, and structural efficiencies can revive unit growth and restore profitability. For now, the tone remains cautious, with management focused less on near-term upside and more on building a leaner, more digitally enabled business that can better weather the current used-car cycle and capture upside when the market turns.</p></div>

<p>CarMax's Q3 earnings call highlighted challenges from softer demand, weaker unit volumes, and margin compression. The company is focusing on cost cuts, digital capabilities, and its in-house finance arm to stabilize performance. Key initiatives include a $150 million SG&A savings target by fiscal 2027 and a 30% reduction in Customer Experience Center workforce. CarMax Auto Finance posted a 9% income increase, but total sales fell 6.9% year-over-year. The company aims to enhance its digital shopping experience and adjust inventory and margins to remain competitive.</p>

CarMax Earnings Call: Sales Slide, Cost Cuts Intensify