Used-car giant

CarMax

(KMX) - Get Report

Wednesday took down sales and earnings guidance for its fiscal first quarter, citing potentially troubling trends in consumer appetites.

The Richmond, Va., company now expects to earn 30 cents to 32 cents a share in the quarter ending May 31 on same-store sales that are down 2% to 4% from a year ago. Analysts surveyed by Thomson First Call had been forecasting earnings of 34 cents a share, and the company's old guidance called for a same-store sales increase of 1% to 3%. Analysts are expecting quarterly sales to total $1.35 billion.

CarMax reported volatile sales patterns over the last two months. After a strong March, it said sales were "very slow" in the first two weeks of April before rebounding, then fell off again in the first 10 days of May. The company said the downturns affected all its markets and appear to be unspecific to CarMax.

"We are unable to link this sales volatility with any single market factor," the company said. "Some of the factors that may be playing a role in the market's sales volatility include consumer reactions to higher gas prices; the recent spike in mortgage interest rates, affecting the availability and attractiveness of mortgage refinancing and therefore reducing the additional cash available for big ticket purchases; the normal short-term disruptions associated with manufacturer incentives aimed at reducing excess inventories; and the somewhat higher-than-normal wholesale price increases in March and April."

The company said it doubts unusual discounts would "be justified or productive" at this point. It went on to note that because there are five Saturdays and a Monday holiday in May, the month will go a long way to determining how the quarter turns out.

"Although we certainly hope that the remainder of May brings a sales improvement, current trends suggest that we should expect comp store used units of -2% to -4% for the quarter," CarMax said. "Because of our stronger profit performance in March, we were roughly in line with profit expectations at the end of April. If sales continue on the current trend, however, we would expect profits for the quarter to be in the range of 30 to 32 cents."