Shares of auto retailer CarMax (NYSE:KMX) are getting hit pretty bad today on news that the fiscal third quarter will shape up worse than first thought. The company may see flat same-store used car unit sales for the quarter and, with used cars making up the bulk of its business, has lowered its earnings expectations.

Given the market's harsh response, we'd better look carefully at the company's explanation for its stumble. The official line can be summarized as follows: Slow early September sales and the aftereffects of Isabel have been compounded by a slow start to October.

This has impacted all the company's markets. More specifically, CarMax attributes the slowdown to resilient wholesale used-car prices making it difficult to price used cars competitively with the closeout models in new-car showrooms. Resulting markdowns have hurt profits.

But the company also reminds investors that this year's Q3 sales comparison is a difficult one. With the economy slowing in the past few years, CarMax has been a clear beneficiary as cost-conscious customers look more seriously at used cars. (When the company was part of Circuit City (NYSE:CC), CarMax was sometimes seen as a drag in good times -- but a boon in bad.)

CarMax, for now, is insisting that today's news doesn't represent any sort of "fundamental change" in its business. It's backing that up by not changing its fourth-quarter sales or earnings guidance. That said, it's also clear that what CarMax is citing now -- that Q3 is always volatile because it's the "transition time" for new-car models, hurting used-car valuations -- seems like the sort of thing that goes conveniently overlooked when results are good.

The "bigger picture" surrounding CarMax, however, shouldn't go undiscussed. Commerce Department data released (and generally well received) today suggests that consumer spending is holding up and rose in September, except in the auto business. Continued economic recovery would probably be bad news for CarMax, at least given past history. It seems early to make such a call, though investors seem to be voting with their dollars today.

You can reach Dave Marino-Nachison at .