Shares of CarMax (KMX 0.17%) were pulling back today after the country's largest retailer of used cars, both online and in-store, posted disappointing results in its fourth-quarter earnings report.
As of 3:30 p.m. ET, the stock was down 9.5%.
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CarMax hits a bumpy road
It's been a tough market for used car dealers as high interest rates have significantly raised monthly payments for buyers, and prices have come down from pandemic-era peaks after chip shortages and pandemic-driven demand sent prices skyrocketing.
In the fourth quarter, CarMax revenue fell 1.7% to $5.63 billion, which missed estimates of $5.79 billion.
Retail unit sales rose 1.3%, while comparable store unit sales ticked up 0.1% as the company continues to open new locations. Wholesale units, which make up a minority of the business, were down 4%.
Margins were mostly steady as gross profit per retail used unit was $2,251, down 1% from the quarter a year ago, however higher sales, general, and administrative expenses rose modestly, and earnings per share slipped from $0.44 to $0.32, which fell well short of expectations at $0.49.
CEO Bill Nash gave the performance a positive spin, saying, "We are encouraged by the performance of our business during the fourth quarter," and noted growth in total used unit sales and comps.
However, CarMax's guidance indicates the company sees more trouble ahead.
CarMax dials back long-term expectations
What also weighed on the stock was CarMax's delay in its goal of selling 2 million units annually, which it said would now happen sometime between fiscal 2026 and fiscal 2030. The company's fiscal year ends in February.
The company did say it expected to achieve its $33 billion annual revenue target sooner than its units goal, but the delay shows broader headwinds are impacting its growth.
It's not a surprise to see the stock down given the weak results and the delay in its unit sales target.
