Retail used-car sales giant CarMax (KMX) - Get Report on Friday posted fiscal first-quarter earnings that were a fraction of what it earned a year ago as the coronavirus pandemic kept its physical used-car locations shuttered, bringing both sales and earnings to a screeching halt.
The Richmond, V.A.-based company said net earnings plunged to $5 million, or 3 cents a share, from $266.7 million, or $1.59 a share, in the comparable year-earlier period.
Analysts polled by FactSet had been expecting per-share earnings of 4 cents. Sales fell 40% to $3.23 billion from $5.37 billion. Analysts polled by FactSet had been expecting sales of $2.7 billion.
The results included $122 million in loan-loss provisions for CarMax’s financing unit, the company said. Revenue in its financing segment fell to $51 million from $116 million.
Comparable-store used unit sales declined 42% during the quarter, though rebounded somewhat in May, CarMax CEO Bill Nash noted in the company’s earnings statement.
“We accomplished a lot this quarter, despite the challenges the pandemic posed,” Nash said, noting that more than 80% of the days in the quarter “were negatively impacted by a mix of store closures and limited operations.”
Still, Nash said he was “encouraged” by recent broader sales trends and customer foot traffic experienced in late May and into June, particularly among used-car sales, and particularly online.
As of the end of May, CarMax had $658 million in cash and $1.08 billion of unused capacity on its revolving credit facility, compared with $58.2 million and $997.3 million, respectively, as of February 29, 2020.
Total long-term debt, excluding non-recourse notes payable, declined to $1.71 billion as of May 31, compared with $1.79 billion as of February 29, the company said.
Wedbush analyst Seth Basham last month raised his rating on CarMax to outperform from neutral and his one-year price target to $90 from $70 on expectations that the company is well-positioned to gain marketshare once the pandemic passes.
Shares of CarMax were down 4.9% at $93.15 in trading on Friday.