CarMax (KMX) Q2 2025 earnings summary

Executive summary

• Net sales and operating revenues for Q2 FY2025 were $7.01 billion, down 0.9% year-over-year, with six-month revenues at $14.13 billion, down 4.3%.

• Retail used unit sales grew 5.1% year-over-year, with comparable store sales up 4.3%; wholesale units were flat or slightly down.

• Net earnings for Q2 FY2025 were $132.8 million, up 11.9% year-over-year, and net earnings per diluted share increased 13.3% to $0.85.

• SG&A expenses increased 4.2% but improved as a percentage of gross profit, reflecting cost management.

• CarMax Auto Finance (CAF) income fell 14.4% due to higher loan loss provisions amid industry-wide credit deterioration.

Financial highlights

• Used vehicle sales revenue increased 1.5% to $5.68 billion, while wholesale vehicle sales revenue dropped 12.7% to $1.15 billion.

• Gross profit for Q2 rose 9.1% to $760.5 million, with gross profit per used unit at $2,269 and per wholesale unit at $975, both flat year-over-year.

• Net earnings were $132.8 million, up 11.9% from the prior year; net earnings per diluted share were $0.85, up 13%.

• SG&A expenses increased 4.2% in Q2, mainly from higher compensation and occupancy costs.

• Other sales and revenues (including EPP and finance income) increased 13.2% in Q2, led by higher EPP margins.

Outlook and guidance

• Management expects positive comparable store used unit sales in Q3, slightly below Q2 levels, and continued improvement for the year.

• SG&A as a percent of gross profit targeted to reach mid-70% range annually, requiring efficiency gains and gross profit growth.

• Capital expenditures for FY2025 are estimated at $500M–$550M, focused on reconditioning, auction facilities, and new stores.

• Five new store locations, one reconditioning center, and one auction facility planned for fiscal 2025.

• Confident in ability to grow sales and earnings in the second half, assuming current market conditions persist.