RICHMOND, Virginia — CarMax reported a 22 percent jump in third-quarter earnings Friday as the used car dealership chain sold more cars and expanded its footprint across the U.S.
The Richmond, Virginia, company earned $130 million, or 60 cents per share, for the period ended Nov. 30, up from $106.4 million, or 47 cents per share, a year ago.
The results exceeded Wall Street expectations of 54 cents per share, according to Zacks Investment Research.
CarMax Inc., which runs more than 140 stores that mainly sell used cars and trucks, said revenue increased about 16 percent to $3.41 billion. Analysts expected $3.26 billion.
Shares rose $5.29, or 8.7 percent, to $65.82 in early trading Friday.
Sales at stores open at least one year rose 7.4 percent. That is a key metric because it strips out the volatility of newly opened and closed locations. CarMax opened four stores during the quarter, including two in new markets. Customer traffic to its stores grew for the sixth consecutive quarter, the company said.
Used vehicle unit sales rose 14 percent as the company's average selling price rose more than 2 percent to $19,914. Wholesale vehicle unit sales also increased 10 percent during the quarter. New vehicle unit sales, which make up a smaller part of CarMax's business, increased more than 10 percent. Other revenue, which includes fees it receives from third-party lenders its customers use, increased 30 percent.
CEO Tom Folliard said in a conference call that while declines in used car pricing impacted its competitors, CarMax has proven it can manage in all kinds of volatile environments "and this one is not as volatile as we've seen in the past."
Income from the company's auto financing arm rose nearly 7 percent to $89.7 million in the quarter as it financed more of its customers' vehicles.
Its total gross profit — its profit after reconditioning and other costs — grew 17 percent during the quarter. Gross profit per used vehicle sold increased 1 percent to $2,172 and wholesale gross profit per vehicle rose 4.5 percent to $927.
Expenses increased 11 percent to $316.6 million as the company's store base grew 16 percent since the beginning of last year's third quarter.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .
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