CarMax Reports 53% Net Earnings Increase in Third Quarter of Fiscal 2025

CarMax, Inc. reported its financial results for the third quarter and first nine months of fiscal 2025, revealing a net earnings increase of 53% to $125.4 million for the quarter, compared to $82.0 million in the same period last year. For the nine months ending November 30, 2024, net earnings totaled $410.7 million, a decrease of 4.3% from $428.9 million in the prior year. The company’s total net sales and operating revenues reached $6.2 billion for the quarter, reflecting a 1.2% increase from $6.1 billion in the previous year, while revenues for the nine months fell by 2.7% to $20.4 billion.

The company experienced a notable increase in used vehicle sales, which rose by 1.2% to $4.9 billion in the third quarter, driven by a 5.4% increase in used unit sales. However, wholesale vehicle sales saw a slight increase of 0.3% to $1.2 billion, while revenues from other sales and services grew by 9.7% to $165.9 million. The gross profit for the quarter was $677.6 million, a 10.6% increase compared to the previous year, attributed to higher sales volumes and improved margins.

In terms of operational developments, CarMax's customer engagement metrics showed that online retail sales accounted for 15% of used unit sales, with omni-channel sales representing 56% of total sales. The company operated 248 used car stores across 109 U.S. television markets as of November 30, 2024, and plans to open two additional stores and one stand-alone auction facility by the end of the fiscal year. The company also reported a 7.9% increase in vehicle purchases from consumers and dealers during the third quarter.

CarMax Auto Finance (CAF) income increased by 7.6% to $159.9 million for the quarter, driven by a rise in interest margin and average managed receivables, despite a higher provision for loan losses. The allowance for loan losses as a percentage of managed receivables decreased to 2.70% from 2.92% a year earlier, reflecting tightened underwriting standards. The company’s total managed receivables stood at $17.76 billion, with net credit losses remaining stable compared to the previous year.

Looking ahead, CarMax maintains a cautious outlook, focusing on its omni-channel strategy to enhance customer experience and drive sales. The company aims to achieve long-term targets of selling over 2 million combined retail and wholesale units annually, although it has extended the timeframe for this goal to between fiscal 2026 and fiscal 2030 due to market uncertainties. CarMax continues to invest in its business while managing its capital structure conservatively to ensure liquidity and operational flexibility.