When consumers think about heading out to purchase a car, they often think about all of the issues and problems they may face. Several businesses are trying to alter the way business is done in an effort to ease those concerns. CarMax has often advertised itself as an alternative to aggressive salespeople in an effort to attract more customers.
Coming into second-quarter financial report, CarMax investors had hoped that the auto dealer would build on the positive momentum that it had created earlier in the year. CarMax's numbers were indeed encouraging, and the company thinks it has the long-term vision to maximize its future success.
CarMax's second-quarter results weren't quite as strong as they were in the first quarter, but they still showed a healthy industry environment. Revenue of $5.2 billion was higher by 9% from year-ago levels, and that was quite a bit better than the 6% growth that most following the stock were looking to see. Net income was higher by 6%, at $233.6 million, and earnings of $1.40 per share were better than the consensus forecast of $1.33 per share.
Solid fundamentals helped underpin CarMax's growth. Used-unit sales in comparable stores climbed 3.2%, helping to lift total used-unit sales higher by 6.2% from year-ago levels. That was a slower pace than in the first quarter, but those numbers three months ago got a boost from spending related to tax refunds. Growing web traffic helped keep sales climbing.
Other aspects of CarMax's business were also strong. Wholesale vehicle sales climbed 4.7% from year-ago levels, with CarMax buying a higher percentage of appraised vehicles even as the volume of appraisals eased lower. Meanwhile, gains in other sales and revenue accelerated to 8.5%, with a big bump higher in revenue from extended protection plans. Auto finance income was higher by 4% over the same period.
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