CarMax profit jumps 81% as CarMax beats on revenue and earnings
Revenue reached $7.88 billion, more than $800 million above expectations
Published
CarMax reported second-quarter earnings per share of $1.16, beating expectations by $0.44. Revenue came in at $7.88 billion, ahead of the $7.05 billion analysts had forecast.
Chief executive Keith Barr said the quarter reflected solid execution and early progress on the company's "Shift into GEAR" plan, pointing to price competitiveness, higher margins on extended protection products, a larger share of financing done through the company's own Tier 2 lending, and lower overhead costs as drivers of earnings, which rose 81%.
CarMax did not buy back any shares in the quarter but plans to resume repurchases at a modest level in the third quarter of fiscal 2027. The company also said it remains on track to cut $200 million in overhead costs by the end of fiscal 2027, and will hold a virtual strategic update on November 3 to lay out its growth plans and milestones.
The beat is a sharp turn from the prior quarter, when earnings per share actually fell 5% year over year despite topping a modest estimate. This time earnings and revenue are both moving up together, and the decision to resume buybacks after sitting out the second quarter suggests management has more confidence in the business than the pricing environment alone would explain. The cost-cutting progress and the growth in in-house financing point to the turnaround plan producing real margin gains rather than just talk. The November update gives investors a near-term test of whether this quarter's improvement can be sustained.