Carmax Falls After Revenue Misses on Slower Showroom Trafficby
Fewer used-car shoppers parallels plateauing new-model demand
Vehicle sales rose and earnings matched analysts’ estimates
Carmax Inc. shares declined in early trading after the largest U.S. seller of used autos reported a revenue miss and cited slowing showroom traffic.
Carmax in a statement said revenue rose 2.9 percent to about $4 billion, missing the average analyst estimate of $4.11 billion. The Richmond, Virginia-based company said its 3.1 percent increase in used-vehicle sales by stores open in the second quarter and a year earlier “reflected a solid increase in conversion that was partially offset by a decrease in store traffic.” The fiscal quarter ended Aug. 31.
After six years of growing annual new-car sales in the U.S., more analysts are projecting the end of that streak, which culminated in last year’s record 17.5 million new light-vehicles sold. Slowing traffic on used-car lots may signal that demand is being satisfied and growth may become harder to find.
Carmax fell 2.9 percent to $54.12 at 10:07 a.m. New York time. The shares earlier reached $53.23, the lowest intraday price in more than two months. The stock had gained 3.3 percent this year through Tuesday, lagging the 4.7 percent increase in the Standard & Poor’s 500 Index.
The company said its total used-vehicle sales increased 7 percent, including the 16 stores that have opened since the start of last year’s fiscal second quarter. Carmax said it plans to open 15 stores in fiscal 2017, and then 13 to 16 more in fiscal 2018.
Earnings per share matched the average estimate of 88 cents.