Struggling CarMax Reports Lower Used Car Sales
'It Is Clear CarMax Needs Change,' Interim CEO David McCreight Says
[Stay on top of transportation news: .]
CarMax Inc. said it sold fewer used cars than expected last quarter, adding pressure on interim management to turn the beleaguered used car retailer around.
Comparable used vehicle sales shrank 9% in the third quarter, the company said in a statement Dec. 18, a bigger contraction than the 8.4% decrease analysts polled by Bloomberg anticipated, but between the range of the 8% to 12% decline the company had warned in November.
The company said it expects to lower retail used unit margins in the fourth quarter, and will increase its marketing spend from a year ago, focusing on investing in acquisitions.
Based on recent results, “it is clear CarMax needs change,” interim CEO David McCreight said in the statement. The Richmond, Va.-based used car retailer terminated its former CEO William D. Nash at the start of December as sales have slumped.
Shares fell as much as 7% in New York premarket trading before recouping some losses. The stock has plunged by about half since the start of this year.
Earnings shrunk to 43 cent a share, above the 18 to 36 cents the company had guided earlier. Consensus had projected 38 cents, after cutting their estimates following the preliminary results disclosure.
While the industry has been marred by tariff-led cost increases and weakening consumer credit quality, CarMax had been seen as losing out to online-focused competitors such as Carvana Co., and soon Amazon.com. Inc., which will sell Ford Motor Co.’s used vehicles on its site.
Want more news? Listen to today's daily briefing below or go here for more info:
