CarMax finally put an end to a four-quarter slide in same-store sales, and the market rewarded it. Comparable used-vehicle sales rose 13% in the second quarter versus 5.6% expected, and the company sold more used cars than analysts projected. After five consecutive quarters without growth, used-vehicle gross profit increased. Shares climbed as much as 13%, the biggest intraday gain since June.
New CEO Keith Barr laid out a four-pillar plan last quarter and made clear that lower sticker prices were part of the toolkit. Those reductions are ongoing. CFO Enrique Mayor-Mora said gross profit per unit will trail last year during fiscal Q3 and Q4, and that retail margins in fiscal 2027 are expected to be less than $200 per unit lower than fiscal 2026.
Over the past year, CarMax reduced headcount through several waves of layoffs, with about $6 million of severance expected this quarter. The company plans to resume share repurchases in the third quarter at a modest pace below its pre-pause average, and it will deliver a strategic update in November.
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The turnaround is happening despite higher interest rates, expensive gas, and softer sentiment. Barr called consumers "resilient," noting the company kept its number of lowest-income customers in line with last year while attracting more higher-income buyers, which helped it move newer and higher priced vehicles. Mayor-Mora said the Federal Trade Commission's recent push for clear dealer pricing has helped as more shoppers recognize CarMax's offers as solid value.
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