CarMax Inc. (NYSE: KMX) has reported robust financial results for the first quarter of fiscal year 2026, ending May 31, 2025, demonstrating strong growth across key performance metrics and reinforcing its position as the nation’s largest retailer of used automobiles. This comprehensive analysis delves into CarMax’s Q1 FY 2026 earnings, highlighting significant financial achievements, operational efficiencies, and strategic initiatives that underscore the company’s resilience and growth trajectory in the consumer discretionary sector.
CarMax delivered a remarkable 42.3% increase in net earnings per diluted share, rising to \(1.38 from \)0.97 in the prior year’s first quarter. Total net earnings surged 38.0% to $210.4 million, reflecting the company’s effective earnings growth model anchored by its omni-channel retail experience and operational execution. Retail used vehicle unit sales increased 9.0% to 230,210 units, with comparable store sales up 8.1%, while wholesale vehicle unit sales grew modestly by 1.2% to 149,517 units.
Total gross profit rose 12.8% to \(893.6 million, driven by higher unit volumes and improved unit margins. Notably, gross profit per retail used unit reached a record \)2,407, up \(60 per unit year-over-year, while wholesale gross profit per unit remained historically strong at \)1,047 despite a slight $17 decline. Other gross profit, including service and Extended Protection Plans (EPP), increased 31.3%, supported by cost coverage measures and operational efficiencies.
Selling, General & Administrative (SG&A) expenses increased by 3.3% to $659.6 million, primarily due to higher compensation and benefits linked to volume growth. However, SG&A as a percentage of gross profit improved significantly by 680 basis points to 73.8%, underscoring effective cost management.
CarMax Auto Finance (CAF) income decreased 3.6% to \(141.7 million, impacted by a higher provision for loan losses of \)101.7 million, up from $81.2 million, reflecting economic uncertainties and loss performance in recent loan vintages. Despite this, CAF’s net interest margin improved by 30 basis points to 6.5%, with a consistent weighted average contract rate of 11.4%.
The company accelerated share repurchases, buying back \(199.8 million worth of common stock in Q1 FY 2026, with \)1.74 billion remaining under the current authorization. Additionally, CarMax expanded its non-prime funding program within CAF, earmarking $637.9 million of non-prime loans for sale, enhancing flexibility in financing strategies while mitigating risk.
Operationally, CarMax opened two new reconditioning and auction centers in key metro markets—El Mirage, Arizona, and Midlothian, Texas—supporting growth in Phoenix and Dallas regions.
As of May 31, 2025, CarMax reported total assets of \(27.39 billion and total liabilities of \)21.10 billion, with shareholders’ equity at \(6.29 billion. The company generated \)299.5 million in net cash from operating activities, reflecting strong operational cash flow despite increased provisions and inventory investments. Capital expenditures totaled $136.7 million, supporting infrastructure and growth initiatives.
CarMax’s performance aligns with broader consumer discretionary sector trends, where economic conditions, consumer confidence, and interest rates critically influence demand. The company’s omni-channel retail strategy, digital capabilities supporting 80% of retail sales, and focus on operational efficiency position it well to capitalize on market opportunities despite economic uncertainties.
CEO Bill Nash emphasized, “Our best-in-class omni-channel experience, combined with our diverse business model and sharp execution focus, enables us to deliver significant year-over-year earnings growth and gain market share in a large, fragmented market.” This statement echoes themes from previous earnings calls, highlighting CarMax’s commitment to leveraging technology and customer-centric strategies.
CarMax’s Q1 FY 2026 results demonstrate robust financial health, operational excellence, and strategic agility. The company’s ability to grow retail sales, improve gross margins, manage costs effectively, and expand financing options underscores its leadership in the used vehicle retail market. With strong cash flow generation and disciplined capital allocation, CarMax is well-positioned for sustained growth amid evolving economic conditions.
For detailed financial data and the full report, visit the source document.
Tags: KMX, CarMax, Q1 FY2026, used vehicle sales growth, omni-channel retail, auto finance performance