CarMax Earnings Fall After Beat
CarMax earnings showed Q3 net sales of $5.8 billion and net income of $62 million as used-vehicle margins fell, pressuring near-term margin outlook.
KEY TAKEAWAYS
- Adjusted EPS topped estimates at $0.51 versus $0.38 consensus.
- Net sales fell 6.9% to $5.79 billion while net income dropped to $62.2 million.
- Retail used-unit sales and comparable-store volumes declined as management signaled lower margins to boost volume.
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CarMax earnings for fiscal third-quarter 2026, reported Dec. 18, 2025, showed a sharp drop in profit and weaker revenue as used-vehicle sales and margins softened, even as adjusted results topped analyst estimates and the board installed David McCreight as interim CEO.
KMX Q3 Results and Unit Trends
CarMax, Inc. (NYSE: KMX) reported fiscal third-quarter 2026 results for the quarter ended Nov. 30, 2025, in a press release. Net sales and operating revenues declined 6.9% year over year to $5.79 billion. Net income fell to $62.2 million from $125.4 million a year earlier, and diluted GAAP earnings per share were $0.43, including $0.08 per share in restructuring charges. Adjusted non-GAAP EPS was $0.51, exceeding analyst consensus of $0.38.
Used-vehicle revenue dropped 7.0% to $4.55 billion, while wholesale vehicle revenue fell 6.3% to $1.10 billion. Other sales totaled $151 million, and extended protection-plan revenue declined 8.4% to $97 million. Retail used-vehicle unit sales fell 8.0% to 169,557 units, with comparable-store used unit sales down 9.0%. Used-vehicle gross profit declined 11.0% to $379 million, and wholesale gross profit dropped 17.0% to $115 million.
The declines reflected weaker consumer demand and falling prices across the U.S. used-car market, which pressured revenue and profit.
Leadership Change and Strategy
Effective Dec. 1, 2025, the board appointed David McCreight, a board member, as interim president and CEO and named board chair Tom Folliard interim executive chair. The board has begun a search for a permanent CEO.
Management plans to improve price competitiveness in fiscal fourth quarter by lowering retail used-unit margins and maintaining elevated marketing spend, though at a lower rate than in the third quarter, to stimulate sales. This strategy implies further near-term profit pressure. The company is also pursuing a cost-reduction program targeting at least $150 million in selling, general, and administrative (SG&A) savings by the end of fiscal 2027. Technology and automation, including artificial intelligence tools, are part of the efficiency efforts.
