CarMax's 2Q Trails Estimates Amid Rising Overhead Costs

Despite stronger-than-expected sales, CarMax (NYSE:KMX) revealed second-quarter earnings on Thursday that trailed Wall Street’s hopes as the company grappled with higher overhead costs.

Continue Reading Below

Shares of the largest U.S. retailer of used and new cars retreated about 2% in the wake of the disappointing results.

Richmond-based CarMax said it earned $111.6 million last quarter, compared with $111.2 million a year earlier. Per-share earnings were flat at 48 cents, missing forecasts from analysts by four cents.

Revenue rose 6.6% to $2.76 billion, essentially meeting the Street’s view of $2.75 billion.

“We are pleased with our improved retail sales in the second quarter, as used unit comps strengthened and we continued to open new stores,” CEO Tom Folliard said in a statement.

However, CarMax’s bottom-line growth was hampered by an 11% year-over-year leap in overhead costs to $254.7 million. The company blamed the higher costs on the “ramp in our store growth rate” and “tough” comparisons with the year before.

Also, CarMax said wholesale unit sales shrank 2%, compared with an 8% rise in total used unit sales.

CarMax’s shares slid 7.5% to $29.51.