CEO: CarMax Focused On Customer Experience

MICHAEL FELBERBAUM

RICHMOND, Va. (AP) â¿¿ Used car retailer CarMax Inc. continues to focus on improvements to better serve customers and grow its business, CEO Tom Folliard told shareholders at its annual meeting Monday.

The head of the Richmond-based company said CarMax is enhancing its website, changing its existing store model to improve efficiency and the customer experience. It also is developing alternative and smaller store models to help it enter new or smaller markets in the U.S. Some stores are even using iPads and other technology to assist customers.

"Really we've been evolving CarMax for 15 years," Folliard said. "That's the end-game goal: Give them a better experience from the time they walk in the door to the time they leave so they are more likely to buy a car and they're more likely to tell their friends about it."

CarMax has seen its performance improve as a result of sales increases, cost-cutting efforts and gains from its financing division. But low consumer confidence, tighter lending standards and high unemployment have hindered the industry's recovery. Used car sales have typically been strong during the recession as buyers looked to cut costs out of job security fears.

In the last fiscal year, the company saw its earnings grow 10 percent to $413.8 million. Revenue increased 11 percent to a record $10 billion as it sold more than 408,000 used vehicles and an additional 316,649 vehicles at wholesale auction. Sales at stores open at least one year grew 1 percent during the fiscal year after increasing 10 percent the year earlier.

Last week, the company reported a 4 percent decline in its first-quarter profit on lackluster sales and profit margins. Revenue grew 3.5 percent, but was below Wall Street expectations. Sales at stores open at least one year were flat for the quarter after rising 6 percent and 9 percent in the same quarter the last two fiscal years.

CarMax, which runs more than 110 stores that primarily sell used cars and trucks, plans to have a total of 118 stores by the end of its fiscal year on Feb. 28, 2013. Over the next three years, the company also expects to open 10 to 15 new stores per year.

"The best part about CarMax's story before the recession was the growth that we had in front of us and this incredible runway just in the United States ... that's still the best part of our story today," Folliard said. "Not only can we go to brand new markets, but we can build out some of the existing markets as well."

To support future growth, the company has been focused on lowering expenses, and improving traffic, execution and gross margins. For example, CarMax has improved its sale and appraisal rates, and it also has lowered the costs for reconditioning vehicles by more than $250 per car while improving its quality standards.

Folliard said the company will "always be working on optimizing our cost structure. ... We'll never be satisfied. I think we can always do better."

Shareholders on Monday also re-elected four directors to its board. A shareholder proposal for an advisory vote to have directors stand for re-election annually also was approved.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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