slid Friday after the dealership operator trimmed its same-store sales guidance and said first-quarter earnings would be at the low end of its previous range.
The Virgina company expects to earn 35 cents or 36 cents a share on same-store sales growth of 6% for the quarter ending this month. Analysts were expecting earnings of 37 cents a share. The company previously pegged comps growth at 9% to 12% and had forecast earnings of 35 cents to 38 cents a share.
Shares were recently down $2.32, or 8.2%, to $26.08.
CarMax said it has been paying more than it expected to buy cars in auctions, and also suggested that higher gas prices are curbing consumer enthusiasm. The company said the high auction prices presaged a slower summer selling season last year and could do so again in 2005.
"Last year in the spring and summer, we kept our inventories higher than our sales rates, anticipating a stronger summer selling season than materialized," CarMax said. "This year, we have begun reducing our inventories to get them in line with sales rates. We also are countering the unusually high wholesale market pricing by adjusting our purchase offers on cars that we buy in our stores."
The company plans to release first-quarter results on June 20.