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Investing.com — CarMax (NYSE:KMX) delivered on results, but also failed to increase same-store sales, which is now driving shares 7% lower.
Same store sales dropped 0.8% and total sales were lower by 1%, the company reported for the third quarter. That compares with increases of 7.5% and 11%, respectively, for the third quarter in 2019. The unexpected drop comes as used car sales overall have been rising as people quit flying and move out to the suburbs.
The used-vehicle sales pace has been declining since peaking in mid-July, according to Cox Automotive. In June and July, used vehicle sales climbed rapidly and were running between 10% and 15% above summer 2019. Since then, the sales pace has fallen, turning negative in August and hitting a low point of down 17% in mid-November.
“Demand softened and sales trended down in the latter part of the quarter,” CarMax said in a statement. “Some of the factors that we believe impacted sales were the surge in COVID-19 cases, which constrained demand and resulted in tightened occupancy restrictions and shelter-in-place orders from state and local governments, as well as the uncertainty around the election and future stimulus programs.
CarMax reported third quarter earnings per share of $1.42, better than the expected $1.14, on sales of $5.18 billion, which compares to the estimated $5.04 billion.
Shares of CarMax hit a record in August, and have since fallen 13%.
Rival AutoNation Inc (NYSE:AN) is trading down nearly 2% and Penske Automotive Group Inc (NYSE:PAG) is also in the red.
