CarMax Inc. reported third‑quarter fiscal 2026 results that included $5.79 billion in revenue, a 6.9% year‑over‑year decline, and net earnings of $62.2 million, translating to $0.43 per diluted share. Combined retail and wholesale used‑vehicle unit sales fell 7.2% to 297,160 units, with retail sales down 8% and wholesale sales down 6.2%.
The company’s earnings per share surpassed the consensus estimate of $0.35 by $0.08, a 23% beat, while revenue outperformed the $5.68 billion estimate by $110 million, a 1.9% beat. The EPS gain was largely driven by disciplined cost management and a favorable mix shift toward higher‑margin Auto Finance income, which rose 9.3% to $174.7 million. Revenue growth in the Auto Finance segment offset the decline in retail and wholesale volumes, and the $27 million gain from a non‑prime securitization added to the bottom line.
Retail and wholesale segments continued to face headwinds. Retail unit sales dropped 8% as consumer demand for used vehicles softened amid rising depreciation and tighter financing conditions. Wholesale sales fell 6.2% as the company sold fewer high‑margin vehicles to dealers, reflecting a shift toward lower‑priced inventory. In contrast, the Auto Finance segment benefited from stronger loan sales and a higher mix of higher‑yield products, contributing to the overall earnings beat despite the volume decline.
SG&A expenses increased 1.0% to $581.4 million, driven by higher advertising spend and severance costs related to leadership changes. The company remains on track to complete a $150 million SG&A reduction program by fiscal 2027, indicating a continued focus on cost discipline. Gross margins contracted in both retail and wholesale channels, with retail gross profit per unit falling $71 from the prior year, underscoring the pricing pressure in the used‑vehicle market.
Interim President and CEO David McCreight emphasized that the company’s physical and digital infrastructure remains a competitive advantage, but acknowledged the need for change. Interim Executive Chair Tom Folliard described the results as “unacceptable” and highlighted the importance of a new permanent CEO. CFO Enrique Mayor‑Mora noted that the company is fine‑tuning its asset mix to improve profitability. Management reiterated guidance for the next quarter, indicating a planned reduction in retail margins to stimulate sales volume while maintaining a focus on long‑term profitability.
Investors reacted cautiously, focusing on the company’s margin‑reduction strategy and the ongoing leadership transition. The market’s attention to these factors suggests that, while the earnings beat was notable, the broader context of declining sales volumes and pricing pressure tempered enthusiasm for the results.
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