According to its earnings announcement, the Richmond, Va.-based vehicle retailer saw net income drop 3.6% year on year to $175.4 million in the three months to May 31. Net earnings per diluted share came to 90 cents, up from 86 cents a year earlier.
In the same period, net sales and operating revenues rose 2.8% year on year to $4.13 billion. Growth was backed by higher used vehicle sales (up 4.0%), same-store used unit sales (up 0.2%), and wholesale vehicle unit sales (up 1.8%).
Meanwhile, the company said SG&A expenses increased 8.7% due to an addition of new stores and an increase in share-based compensation. It also said interest expense rose $11.1 million year on year, reflecting "finance and capital lease obligations, which resulted from the recent extension of select store leases beyond their original term, as well as higher average outstanding debt levels in fiscal 2017."
Analysts had estimated earnings of 93 cents per share on revenue of $4.2 billion for the quarter, compared with earnings of 86 cents per share on revenue of $4.01 billion for the same quarter last year.
CarMax's share price was sinking by 3.4% in premarket trading to $48.90 in morning trading.