CarMax stock plummets as earnings miss amid affordability issues

CarMax Inc. KMX's shares fell 9.7% to a more than two-year low in premarket trading Thursday, after the used vehicle retailer reported a second-quarter profit that fell well below expectations, as affordability challenges led to sales falling sharply in the final months of the quarter. Net income for the quarter to August 31 fell to $125.9 million, or 79 cents a share, from $285.3 million, or $1.72 a share, in the year-ago period. The FactSet consensus for earnings per share was $1.39. Sales increased 2.0% to $8.14 billion, lower than the FactSet consensus of $8.54 billion, as vehicle unit sales fell 10.3% to 376,616, but average used vehicle prices rose 9.6% to $28,657 and average wholesale vehicle prices fell 17.0% to $10,179. Comparable-store used vehicle unit sales dropped 8.3%, compared with the FactSet consensus for a 3.6% decline. The company said in a statement that there were a number of macroeconomic factors that impacted our second quarter unit sales performance, such as vehicle affordability challenges that stem from widespread inflationary pressures, as well as rising interest rates and low consumer confidence. The stock has tumbled 33.6% year to date, while the S&P 500 SPX has dropped 22.0%.