Used car retailer CarMax Inc. (NYSE: KMX) reported a 13% growth in second-quarter earnings, reflecting a marked increase in revenues amid strong sales across all channels. The results also exceeded analysts’ expectations. Following the announcement, the company’s stock gained sharply early Tuesday.
Net income increased to $233.6 million or $1.40 per share from $220.9 million or $1.24 per share in the second quarter of 2019. Analysts had forecast slower growth.
Solid Comps
Driving the bottom-line growth, net sales and operating revenues climbed 9.1% annually to $5.20 billion during the quarter and topped the Street view. Used unit sales in comparable stores increased 3.2% and total used unit sales grew 6.2%.
There was a 4.7%
year-over-year growth in total wholesale vehicle unit sales, aided by
an increase in the appraisal buy rate, which was partially offset by
lower appraisal traffic.
“CarMax posted solid second-quarter results, and our double-digit increase in earnings per share reflected growth across our used, wholesale and CAF operations, along with ongoing share repurchases,” said CEO Bill Nash. During the August quarter, the management repurchased 1.5 million shares for $128.3 million.
Omnichannel Push
The outlook for the remainder of the fiscal year is bullish as the company is making the omnichannel experience available to the majority of its customers. It is estimated that around one-third of CarMax’s customers can currently access the omnichannel facility, which allows them to move seamlessly between the online channels and physical stores.
Growth Drivers
Of late, CarMax has been reaping the fruits of its aggressive store-expansion drive and growing online traffic. The company also benefits from the favorable lending environment and the effective integration of its in-store and online capabilities.
Also read: CarMax Q1 2020 Earnings Conference Call Transcript
CarMax shares rose consistently in recent years and reached an all-time high in July. The stock has moved up 38% since the beginning of the year and 16% in the past twelve months. It gained about 5% during Tuesday’s premarket trading session, immediately after the earnings announcement.