CarMax (NYSE:KMX), the largest used car retailer in the United States, reported its Q2 2024 earnings on Monday, matching estimates at 75 cents per share. This figure marks a decrease from the previous year's earnings of 79 cents per share, aligning with InvestingPro's tip that highlighted a declining trend in earnings per share for the company. The company's revenues surpassed projections, reaching $7.07 billion, albeit representing a 13.2% year-over-year (YoY) decline. This follows the trend noted by InvestingPro, where analysts anticipate a sales decline in the current year.
In a challenging quarter, CarMax's used-vehicle sales outperformed forecasts at $5.59 billion but still fell 11% YoY due to lower retail units and average selling prices (ASPs). The company also recorded a significant plunge in wholesale revenues by 21.8%, amounting to $1,322 million. This aligns with the InvestingPro data that showed a Revenue Growth of -17.19 % for LTM2024.Q2.
The firm's administrative costs rose by 8.3% to $585.7 million during the period. Meanwhile, CarMax Auto Finance income dropped significantly by 26.2% YoY to $135 million. The company's Gross Profit Margin for LTM2024.Q2 stood at 11.84 %, as reported by InvestingPro, which reflects the company's weak gross profit margins, another point highlighted by InvestingPro Tips.
Despite the challenges faced in Q2, CarMax maintained a solid financial position with cash reserves standing at $521.1 million. This is in line with InvestingPro's tip that the company's liquid assets exceed short term obligations. However, the company's long-term debt also increased to $1,608.7 million, which aligns with the tip that CarMax's total debt has increased for consecutive years.
Additionally, CarMax announced that its share repurchase authorization stood at $2.45 billion, indicating an ongoing commitment to return capital to shareholders amid challenging market conditions, despite not paying a dividend to shareholders, as noted by InvestingPro Tips.
The performance of CarMax comes into focus as peer companies O'Reilly (NASDAQ:ORLY) Automotive, Advance Auto Parts (NYSE:AAP), and AutoZone (NYSE:AZO) also reported their financial results on Monday. The specifics of these companies' performances were not detailed in the context provided. As a prominent player in the Specialty Retail industry, as pointed out by InvestingPro Tips, CarMax's performance can be a significant indicator for the industry's overall health.
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