reduced its second-quarter earnings outlook Tuesday, saying bad weather in the Southeast prolonged a sales slump that has been going on all summer.
The used-car dealer expects to earn 27 cents to 30 cents a share in the quarter ending Aug. 31, down from its previous estimate of 30 cents to 35 cents a share. Same-store sales will fall 5% to 7%. The company had previously forecast same-store sales that were unchanged to down 5% in the quarter.
Analysts surveyed by Thomson First Call were expecting earnings of 32 cents a share in the second quarter on sales of $1.37 billion.
"Both sales and earnings were tracking at the lower end of our expected range through July as the volatility we experienced in the first quarter continued," the company said. "However, sales in the beginning of August have been substantially slower than anticipated. This slow start has been exacerbated by the effects of Tropical Storm Bonnie and Hurricane Charley, which caused significant disruption to our stores from Florida through the mid-Atlantic from Thursday through Saturday of the past week."
CarMax said the guidance reflects more than just storms.
"Even absent the storm effects, evidence continues to be strong that the sales softness is industry-wide," the company said. "For the second calendar quarter, the publicly owned franchised dealers all reported soft used vehicle sales trends, with used car unit comps declining by an average of more than 9%, which was substantially lower than our results for the same period.
"Consequently, we continue to believe the CarMax concept provides significant advantages even in a difficult used car sales environment."