CARMAX REPORTS THIRD QUARTER SALES AND
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ANNOUNCES FISCAL YEAR 2005 SUPERSTORE OPENING PLANS
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Richmond, Va., December 4, 2003 - CarMax, Inc. (NYSE: KMX) today reported record
third quarter sales for the quarter ended November 30, 2003.
o Comparable store used unit sales rose 2% for the quarter.
o Total third quarter used unit sales grew 13%.
o Total sales increased 14% to $1.07 billion from $936.8 million in
the same period last year.
o The company continues to expect third quarter earnings per share in
the range of 16 cents to 18 cents, with the mid-point of the range
being the most likely outcome.
o The company announced plans to open approximately 10 used car
superstores in the next fiscal year, expanding its superstore base
by approximately 20%.
Sales Commentary
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"We are pleased that the quarter's used unit comp sales growth came in at the
upper end of our revised expectations," said Austin Ligon, president and chief
executive officer. "We believe there were two main factors that contributed to
the pickup in our comparable store sales rate during the second half of the
quarter. First, we reduced our margin targets on selected cars at mid-quarter to
improve our price position. Second, we saw wholesale prices decline at a faster
pace in October and November, consistent with our expectations. Our newly opened
stores continue to perform somewhat above our expectations.
"The third quarter, which encompasses the new car model-year changeover period,
is always our most volatile and challenging quarter," Ligon said. "In our
October 15 release, we noted two probable contributors to the sales slowdown we
had seen to that point:
o Flatter than normal wholesale prices through mid-October, which
meant that some of our used car prices were likely less competitive
with new car closeout models than usual.
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CarMax, Inc.
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o A possible return to a more normalized fall seasonality after two
exceptionally good fall seasons in fiscal 2002 and 2003, which were
driven by sharper-than-normal wholesale pricing declines during the
preceding summers.
"Based on our internal wholesale pricing data through the end of November, we
continue to hold these views," said Ligon. "At this point, it appears that
wholesale pricing this year is following a pattern similar to that we observed
during fiscal 1999, 2000 and 2001. As a result, we expect wholesale prices to
bottom out in December as they typically have, and we would expect a relatively
normal fourth quarter used car market environment."
Third Quarter Earnings Expectations
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"We expect third quarter earnings per share in the range of 16 to 18 cents, most
likely at the midpoint of the range," said Ligon. "This expectation is
consistent with the guidance we gave in October." In last year's third quarter,
CarMax reported net earnings per share of 14 cents, including 4 cents of costs
associated with the separation from Circuit City.
"We plan to issue sales and earnings guidance for the fourth quarter and current
fiscal year when we release third quarter earnings on December 17," said Ligon.
Store Openings
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CarMax opened 2 superstores during the third quarter, entering the Memphis
market with a standard superstore and adding a satellite superstore in Glencoe
in the Chicago market. The company has opened 6 superstores thus far in fiscal
2004. In the fourth quarter, CarMax plans to open 2 superstores, entering the
Louisville market with a standard superstore and adding a satellite superstore
in Las Vegas. In addition, during the fourth quarter, the company expects to
co-locate its two remaining stand-alone new car franchises next to a new
satellite used car superstore in Los Angeles.
Fiscal 2005 Store Opening Plan
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During the fiscal year ending February 28, 2005, the company plans to expand its
used car superstore base by approximately 20%, opening approximately 10 used car
superstores. Planned entries into new mid-sized markets include
Indianapolis, Ind.; Columbia, S.C.; Austin, Tex.; and Albuquerque, N.M.
Satellite superstore additions are planned for Winston-Salem, N.C.;
Fayetteville, N.C.; Miami, Fla.; and Richmond, Va. CarMax also plans to add a
standard superstore and a satellite superstore in the Los Angeles market on
sites that were land-banked when the company suspended growth in 1999.
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CarMax, Inc.
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Retail Vehicle Sales Change
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Three Months Ended Nine Months Ended
November 30 November 30
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2003 2002 2003 2002
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Comparable store vehicle sales:
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Used vehicle units........... 2% 8 % 6 % 11 %
New vehicle units............ 2% (16)% (2)% (5)%
Total units.................. 2% 5 % 5 % 9 %
Used vehicle dollars......... 4% 8 % 7 % 11 %
New vehicle dollars.......... 5% (17)% 0 % (4)%
Total dollars................ 4% 3 % 6 % 9 %
Total vehicle sales:
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Used vehicle units........... 13% 17 % 18 % 17 %
New vehicle units............ 1% (20)% (3)% (10)%
Total units.................. 12% 12 % 16 % 14 %
Used vehicle dollars......... 16% 17 % 19 % 18 %
New vehicle dollars.......... 4% (21)% (1)% (10)%
Total dollars................ 14% 9 % 16 % 13 %
Percent Retail Vehicle Sales
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Three Months Ended Nine Months Ended
November 30 November 30
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2003 2002 2003 2002
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Vehicle units:
Used vehicles................. 91% 90% 91% 89%
New vehicles.................. 9 10 9 11
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Total............................. 100% 100% 100% 100%
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Vehicle dollars:
Used vehicles................. 87% 85% 87% 85%
New vehicles.................. 13 15 13 15
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Total............................. 100% 100% 100% 100%
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Retail Unit Sales
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Three Months Ended Nine Months Ended
November 30 November 30
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2003 2002 2003 2002
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Used vehicles..................... 51,361 45,274 169,556 143,461
New vehicles...................... 5,079 5,051 16,804 17,276
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Total............................. 56,440 50,325 186,360 160,737
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CarMax, Inc.
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Average Retail Selling Price
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Three Months Ended Nine Months Ended
November 30 November 30
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2003 2002 2003 2002
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Used vehicles..................... $15,393 $15,176 $15,382 $15,354
New vehicles...................... $23,968 $23,241 $23,566 $23,216
Weighted average.................. $16,165 $15,985 $16,120 $16,199
Earnings Release and Conference Call Information
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CarMax will release third quarter earnings on Wednesday, December 17, 2003,
before the market opens. The company will host a conference call for investors
at 10:00 a.m. Eastern time on that date. Domestic investors may access the call
at 1-888-298-3261 (conference I.D.: 4314399). International investors should
dial 1-706-679-7457 (conference I.D.: 4314399). A live Web cast of the call will
be available on the company's investor information home page at
http://investor.carmax.com or at www.streetevents.com.
A replay of the call will be available beginning at approximately 2:00 p.m.
Eastern time on December 17 and will run through midnight, December 24, 2003.
Domestic investors may access the recording at 1-800-642-1687 (conference I.D.:
4314399) and international investors at 1-706-645-9291 (conference I.D.:
4314399). A replay of the call also will be available on the company's investor
information home page or at www.streetevents.com.
About CarMax
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CarMax is the nation's leading specialty retailer of used cars. Headquartered in
Richmond, Va., CarMax currently operates 46 used car superstores in 22 markets.
CarMax also operates 14 new car franchises, 12 of which are integrated or
co-located with its used car superstores. During the twelve month period ended
November 30, 2003, the company sold 216,230 used cars, which is 91 percent of
the total 238,118 vehicles the company sold during that period. For more
information, access the CarMax Web site at www.carmax.com.
Forward-Looking Statements
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The company cautions readers that the statements contained herein regarding the
company's future business plans, operations, opportunities, or prospects,
including without limitation any statements or factors regarding expected sales,
margins, or earnings, are forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based upon management's current knowledge and
assumptions about future events and involve risks and uncertainties that could
cause actual results to differ materially from anticipated results. For more
details on factors that could affect expectations, see the company's Annual
Report on Form 10-K for the fiscal year ended February 28, 2003, and its
quarterly or current reports as filed with or furnished to the Securities and
Exchange Commission.
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Contacts: Dandy Barrett, Director of Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597