CARMAX RAISES 4th QUARTER EXPECTATIONS AGAIN;
CITES SEASONAL SUBPRIME SALES INCREASE
Richmond, Va., February 22, 2005 - For the fourth quarter ending
February 28, 2005, CarMax, Inc. (NYSE: KMX) today:
|X| Raised comparable store used unit sales expectations to growth of
11% or 12%, and
|X| Raised earnings per share expectations to 26 cents or 27 cents.
On February 3, 2005, CarMax had raised fourth quarter expectations of comparable
store used unit sales growth to a range of 7% to 9%, from earlier expectations
in a range of 2% to 7%, and earnings per share to a range of 23 cents to 25
cents, from earlier expectations in a range of 19 cents to 23 cents.
"At the end of January, we began to experience a dramatic increase in sales
financed by our subprime lender DRIVE," said Austin Ligon, president and chief
executive officer. "Based on industry patterns, we understand that subprime
transactions can see a two-to-threefold increase during tax refund season, and
we have seen such an increase since the end of last month. We now believe that
DRIVE-financed sales will contribute approximately 5 percentage points
incrementally to our fourth quarter used unit comp sales. We had been reluctant
to forecast such an increase in our subprime business based solely on the few
superstores that were testing DRIVE in last year's fourth quarter." CarMax
rolled out subprime lending to its full superstore base in August 2004.
"With this seasonal increase in DRIVE-financed sales, as well as the continuing
strength in our used unit sales overall, we now expect fourth quarter comp store
used unit sales growth of 11 or 12% and earnings per share of 26 or 27 cents,"
Ligon said. "The subprime sales' incremental contribution of about 5 percent to
fourth quarter used unit comp sales includes a run rate of approximately 8
percentage points in February. Industry patterns suggest that we should expect
the seasonally stronger subprime traffic to continue in March, and then moderate
somewhat in April before returning in May to levels in line with those we had
been seeing before tax refund season. Of course, because such a spike in
subprime sales occurs seasonally, it will not add incrementally to future years'
sales and will simply be built into our annual sales performance." CarMax has
said previously that DRIVE-financed sales have generally comprised approximately
3 percent of used unit sales.
-more-
CarMax, Inc.
Page 2 of 2
CarMax plans to issue fourth quarter and fiscal year-end comparable store sales
on Friday, March 4, 2005, and fourth quarter and fiscal year-end earnings
results on Wednesday, March 30, 2005, both before the opening of the New York
Stock Exchange.
About CarMax
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CarMax, a Fortune 500 company and one of the Fortune 2005 "100 Best Companies to
Work For," is the nation's leading specialty retailer of used cars.
Headquartered in Richmond, Va., CarMax currently operates 58 used car
superstores in 27 markets. CarMax also operates seven new car franchises, all of
which are integrated or co-located with its used car superstores. During the
twelve month period ended November 30, 2004, the company retailed 238,200 used
cars, which is 92 percent of the total 259,402 vehicles the company retailed
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 in this release about 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 on 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 29, 2004, and its
quarterly or current reports as filed with or furnished to the Securities and
Exchange Commission.
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Contacts
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Investors and Financial Media:
Dandy Barrett, Assistant Vice President, Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597
General Media:
Lisa Van Riper, Assistant Vice President, Public Affairs, (804) 935-4594