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Feb 28, 2023
CarMax Q4 2023 Earnings Report
CarMax experienced a revenue decline due to decreased used vehicle sales, but maintained robust retail and wholesale margins through cost management.
Key Takeaways
CarMax reported a decrease in net revenues and earnings per share for the fourth quarter of fiscal year 2023. While used vehicle sales declined, the company focused on profitable market share gains and cost management, which contributed to robust margins.
Net revenues decreased by 25.6% compared to the prior year fourth quarter, totaling $5.7 billion.
Retail used unit sales declined by 12.6%, with comparable store used unit sales down by 14.1%.
Gross profit per retail unit increased to $2,277, up $82 per unit versus last year.
SG&A expenses decreased by 7.7% due to active cost management.
CarMax
CarMax
CarMax Revenue by Segment
Revenue by Segment
Used Vehicles Revenue
CapyFin.comWholesale Vehicles Revenue
CapyFin.comOther Revenue
CapyFin.com Forward Guidance
CarMax is planning new store growth of five locations and expects capital expenditures of approximately $450 million in fiscal year 2024.
Positive Outlook
- Low-single-digit gross profit growth expected to lever SG&A in fiscal year 2024.
- Significant pricing moves should allow total interest margin to level off in fiscal year 2024.
- CAF adjusted its underwriting standards, including reducing its targeted percentage of Tier 3 volume from 10% to 5%.
- Company remains committed to returning capital back to shareholders over time and may resume share repurchases in the future.
- Company affirms long-term financial targets
Challenges Ahead
- Vehicle affordability challenges continued to impact fourth quarter unit sales performance.
- Headwinds remained due to widespread inflationary pressures, climbing interest rates, tightening lending standards and prolonged low consumer confidence.
- CAF income decreased 36.1% to $123.9 million, driven by the decline in CAF’s net interest margin percentage and a $43.6 million year-over-year increase in the provision for loan losses
- Total wholesale revenues decreased 41.6% compared with the prior year’s fourth quarter due to a decrease in the average wholesale selling price of approximately $3,200 per unit or 27.8% and the decrease in wholesale units sold.
- Other sales and revenues declined by 11.4% compared with the fourth quarter of fiscal 2022.
Revenue & Expenses
Visualization of income flow from segment revenue to net income