CarMax (KMX), the biggest U.S. seller of used cars, jumped after the company posted better-than-expected quarterly profit as cost cuts helped offset slowing demand.
CarMax reported fiscal 2023 fourth quarter earnings per share (EPS) of 44 cents, nearly double analysts' estimates. Revenue dropped 25.6% to $5.72 billion, short of forecasts.
Sales declined 12.6%, with comparable store sales falling 14.1%. The company indicated that "vehicle affordability challenges" continued to impact performance. It said that "headwinds remained" because of inflation, rising interest rates, tightening lending standards, and "prolonged low consumer confidence."
At the beginning of the quarter, CarMax cut costs by slowing the acquisition of cars, reducing marketing and capital expenditures, and freezing corporate hiring.
The company’s "deliberate steps to navigate the pressures facing the used car industry are driving sequential improvements in our business," said CEO Bill Nash.
CarMax shares are up more than 10% today as of 2 p.m. New York time. They’ve risen 19% so far this year, compared with a 7% gain in the S&P 500.