CarMax Inc (NYSE:KMX) shares dropped more than 4% in premarket trading on Thursday after the used-car retailer warned of lower retail margins and increased marketing spending in the current quarter, even as its third-quarter results came in ahead of expectations.
For the third quarter of fiscal 2026, CarMax reported earnings of $0.43 per share, beating the consensus forecast of $0.37. Revenue declined about 7% year over year to $5.8 billion but still exceeded analyst expectations of $5.69 billion.
Sales volumes remained under pressure. Retail used vehicle unit sales fell 8% compared with a year earlier, while comparable-store used unit sales declined 9%.
Looking ahead, CarMax provided an early view of its fiscal 2026 fourth-quarter plans, outlining measures intended to improve sales momentum. The company said it plans to sharpen price competitiveness by reducing retail used-vehicle margins during the quarter.
CarMax also expects to increase marketing spending on a per-unit basis compared with last year, although the increase will be smaller than in the third quarter. The additional investment will focus on customer acquisition, with the aim of supporting both vehicle buying and selling activity as the company works to stabilize demand.
In addition, CarMax announced changes to its leadership team effective December 1, 2025. Board member David McCreight was appointed interim president and chief executive officer, while board chair Tom Folliard will take on the role of interim executive chair. The company said it has begun the search for a permanent CEO.
“I’m honored to serve as Interim President and CEO at this important juncture for CarMax. Our unmatched physical and digital infrastructure, beloved national brand, and award-winning culture provide us with incredible advantages,” said McCreight.
“Despite these advantages, based on recent results, it is clear CarMax needs change,” he added.