CarMax (KMX) Q1 2027 earnings summary

Executive summary

• Net sales and operating revenues rose 6.2% year-over-year to $8.01 billion, driven by higher used and wholesale vehicle sales and increased average selling prices.

• The company executed a four-pillar strategy focused on competitive offerings, seamless customer experience, maximizing transaction value, and cost efficiency, with leadership transition and digital integration supporting growth.

• Net earnings declined 11.8% year-over-year to $185.6 million, with diluted EPS down 5.1% to $1.31.

• SG&A expenses decreased 3.7% to $635.2 million, reflecting ongoing cost reduction efforts and improved leverage, with a $200 million savings target by fiscal 2027.

• CAF financed 43.3% of net retail units, with income at $140.2 million and credit loss performance in line with expectations.

Financial highlights

• Used vehicle sales increased 4.7% to $6.39 billion, with average retail selling price up 4.5%.

• Wholesale vehicle sales grew 14.0% to $1.43 billion, with unit sales up 8.4%.

• Gross profit declined 4.4% to $854.4 million, with retail gross profit per used unit down $230 to $2,177; wholesale gross profit per unit was $1,046.

• SG&A per total unit improved by $118, or 6.8%, to $1,619.

• CAF's total interest margin percentage increased to 6.7% of average auto loans outstanding.

Outlook and guidance

• Management targets $200 million in SG&A exit rate savings by end of fiscal 2027, with full impact expected in fiscal 2028.

• Used vehicle margins are expected to decline by about $200 per unit for the full year, while EPP margin per unit is projected to increase by $35 in fiscal 2027.

• Strategic update planned for late Fall to provide further detail on growth initiatives and performance expectations.

• Capital expenditures for fiscal 2027 are estimated at $400 million, down from $541 million in fiscal 2026.