CarMax, Inc. (NYSE:KMX) shares declined 7.2% after the used car retailer reported second-quarter earnings that fell well below analyst forecasts, as both revenue and profit were hit by tough market conditions.
The company posted EPS of $0.64 for the quarter ending August 31, 2025, far below the expected $1.04 per share. Total revenue came in at $6.59 billion, missing the consensus estimate of $7.04 billion and down 6% from $7.01 billion in the same quarter last year.
Retail used vehicle sales, a core metric for CarMax, dropped 5.4% to 199,729 units, while comparable store sales fell 6.3%. Revenue from used vehicle sales declined 7.2% to $5.27 billion, and wholesale vehicle unit sales decreased 2.2% to 138,302 units.
“While this was a challenging quarter, we remain confident in our long-term strategy and the strength of the earnings model that we have built,” said Bill Nash, president and CEO of CarMax.
CarMax’s finance arm, CarMax Auto Finance (CAF), saw income drop 11.2% to $102.6 million, primarily due to an increase in provisions for loan losses, which rose to $142.2 million from $112.6 million in the year-ago quarter. The provision included a $71.3 million increase in estimated lifetime losses on existing loans, largely tied to weaker performance in the 2022 and 2023 loan vintages.
In response to the challenging market environment, CarMax unveiled plans to cut selling, general, and administrative expenses by at least $150 million over the next 18 months, expecting some savings in fiscal 2026, with the bulk materializing by the end of fiscal 2027.
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