CarMax Inc. (NYSE: KMX) is trading lower premarket on Thursday after reporting third-quarter 2025 earnings.
The used-car retail giant reported earnings per share of 43 cents, beating the analyst consensus estimate of 39 cents. Adjusted earnings per share for the quarter were 51 cents, which excluded restructuring charges of 8 cents per share.
Quarterly sales of $5.794 billion, down 6.9% year-over-year, surpassed the Street view of $5.678 billion.
Quarterly SG&A expenses increased 1.0% year-over-year to $581.4 million compared to the prior-year quarter.
Also Read: CarMax Credit Worries Mount: November Data Shows Soft Trends, Rising Defaults
Leadership Change
CarMax has announced leadership changes effective December 1, 2025. David McCreight, a member of the Board, has been named Interim President and CEO. Tom Folliard, Chair of the Board, has been named Interim Executive Chair of the Board. A search for a permanent CEO is currently underway.
"Our unmatched physical and digital infrastructure, beloved national brand, and award-winning culture provide us with incredible advantages. Despite these advantages, based on recent results, it is clear CarMax needs change," said David McCreight, Interim President and Chief Executive Officer. "Tom and I are committed to positioning CarMax for success while the Board identifies the right permanent CEO to lead CarMax."
Segments
CAF income rose 9.3% to $174.7 million, driven by gains on sale. Total interest margin percentage was 6.2% of average auto loans outstanding, in line with the prior year's third quarter.
CarMax said combined retail and wholesale used vehicle unit sales fell 7.2% year-over-year in the third quarter to 297,160.
Retail used vehicle unit sales declined 8% year-over-year to 169,557, with comparable store used unit sales down 9% year-over-year. Retail used vehicle revenues fell 7%, reflecting fewer units sold.
Wholesale vehicle unit sales slipped 6.2% year-over-year to 127,603 owing to steep market depreciation. Wholesale revenues edged down 6.3% year-over-year, on lower unit volumes.
Other sales and revenues fell by 9.2%, or $15.2 million, mainly due to a decline in EPP revenues.
The company bought 238,000 vehicles in total in the third quarter, a 11.7% decrease. Of these, 208,000 came from consumers (-12.1%) and 30,000 from dealers (-8.6%).
Margins
Total gross profit was $590.0 million, down 12.9% versus last year's third quarter.
Unit margins remained solid, with gross profit of $2,235 per retail used unit and $899 per wholesale unit.
During the third quarter, the firm opened two new store locations in Tulalip, Washington and Rogers, Arkansas.
In the third quarter, the company repurchased 4.6 million shares for $201.6 million, leaving $1.36 billion available under the current repurchase authorization as of November 30, 2025.
Cash and cash equivalents stood at $204.9 million as of November 30.
Outlook
The company says it is on track to cut SG&A expenses by at least $150 million in exit-rate savings by fiscal 2027, taking the first major step this quarter.
The company aims to boost sales by lowering retail used unit margins for better price competitiveness and increasing marketing spend per unit to drive customer acquisition, though less than in the third quarter.
KMX Price Action: CarMax shares were down 10.52% at $36.75 during premarket trading on Wednesday, according to Benzinga Pro data.
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