CarMax Inc. reported fiscal first-quarter earnings that topped Wall Street expectations, even as the retailer cautioned that margins and gross profit per used vehicle remained pressured. The results came as Keith Barr, the company’s new chief executive, outlined a multiyear plan to turn around the business, telling CNBC that the growth path will unfold over several years. Barr, who began leading CarMax on March 16, said the strategy centers on better offerings, a streamlined buying journey, and lean operations, with the goal of delivering sustainable long-term growth and value for shareholders.
The company posted earnings per share of $1.31, above the $0.95 consensus, and revenue of $8.01 billion, versus an expected $7.42 billion. Despite beating on the top and bottom lines, CarMax reported margin pressure and a fall in gross profit per retail used vehicle. Total gross profit declined 4.4% year over year to $854.4 million, while retail used vehicle gross profit slipped 9.5%. Retail gross profit per used unit was $2,177, down $230 from the prior-year period’s record. Net revenue rose 6.2% to roughly $7.6 billion from a year earlier, and net earnings fell to $185.6 million, down 11.8% from $210.4 million a year ago.
Barr said he would release more plan details in late fall, noting that the turnaround would require multiple years to execute but expressing confidence in the strategy. He emphasized initiatives aimed at improving customer experience and efficiency, including updates to CarMax’s website to show monthly payments and the deployment of an AI-powered call agent to assist customers. He also highlighted a growth-oriented, tech-enabled approach that leverages CarMax’s scale and store network to fuel expansion.
Barr stressed that most used-vehicle buyers still prefer in-person store visits and the opportunity lies in integrating online and in-store experiences. He did not comment on Carvana’s plans, but noted that the majority of CarMax customers continue to value visiting a store before purchasing.
Even with the earnings beat, investors remained focused on how the new plan would translate into growth and cost reduction under tougher market conditions. Shares were trading lower at midsession, though CarMax stock had risen about 25% for the year and about 16% since Barr’s March 16 appointment.
The quarter’s results come amid competitive dynamics in used-vehicle retail, where CarMax’s actions to streamline operations and enhance digital offerings are being watched for potential impact on profitability and long-term growth in the sector.
