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(KMX) - Get CarMax Inc Report

said its earnings rose 54% in the first quarter, helped by higher sales and fattening margins on used cars.

CarMax earned $56.8 million, or 53 cents a share, in the quarter, compared with $37 million, or 35 cents a share, a year ago. The latest period had an expense of 7 cents related to stock options and a gain of 3 cents a share related to its finance unit.

Analysts surveyed by Thomson First Call were expecting 38 cents a share in the quarter.

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First-quarter sales rose 19% to $1.89 billion, reflecting same-store sales growth of 6% and total used unit sales growth of 14%. Analysts had been forecasting sales of $1.82 billion in the most recent period, according to Thomson First Call.

"Our used vehicle profits benefited from our steady, strong sales performance and some moderation in used vehicle wholesale pricing," the company said. "Lower wholesale prices favorably affect our used-vehicle acquisition costs and often allow our retail used-car sales and profits to expand.

"As expected, our wholesale gross profit per unit was also higher than last year's first quarter, reflecting the lessons we learned in the particularly difficult wholesale environments of the last two years," CarMax said. "We have continued to refine our wholesale buying process, including the sales consultant's delivery of the offer to the consumer. Wholesale gross profit per unit was lower than the preceding quarter, however, as a result of the normal seasonal moderation in wholesale pricing."

For 2007, CarMax sees same-store sales rising by 2% to 8%, and said that if first-quarter sales continue, it expects to hit the "upper end" of its previous $1.25 to $1.47 a share guidance.

"However, based on the volatility we've seen in recent years, we are not willing to adjust our estimate until we are further into the fiscal year."