Carmax Inc
Q2 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +4.13%.
Did KMX Beat Earnings? Q2 2026 Results
CarMax posted a deeply disappointing second quarter of fiscal 2026, with earnings per diluted share of $0.64 falling 38.07% short of the $1.03 consensus estimate and marking a 24.7% decline from a year ago, while revenue of $6.59 billion missed expectations by 6.07% and contracted 11.8% year over year. The primary culprit was a surge in credit loss provisions at CarMax Auto Finance, where the provision for loan losses climbed to $142.20 million, including a $71.30 million upward revision to lifetime loss estimates on 2022 and 2023 loan vintages, dragging CAF income down 11.2% to $102.60 million. Comparable store used unit sales fell 6.3%, a sharp reversal from 4.3% growth in the prior-year quarter, compounding pressure on a gross profit that slipped 5.6% to $717.70 million. The results triggered securities fraud investigations by multiple law firms scrutinizing the company's disclosures to investors. Looking ahead, management outlined at least $150 million in incremental SG&A reductions over the next 18 months and flagged a $25 million to $30 million gain on sale from a September non-prime securitization transaction expected to benefit third-quarter results.
- Retail used vehicle unit sales decreased 5.4% and comparable store used unit sales decreased 6.3%
- Wholesale units decreased 2.2% but average wholesale selling price rose 1.6%
- Gross profit per retail used unit held steady at $2,216
- CAF income declined 11.2% due to increased provision for loan losses
- Provision for loan losses increased to $142.2 million from $112.6 million, primarily due to worsening 2022 and 2023 vintage performance
- SG&A decreased 1.6% driven by lower share-based compensation
- Digital capabilities supported 80% of retail unit sales; omni sales were 68% and online retail sales 12%
- CAF total interest margin percentage improved 50 basis points to 6.6%
“While this was a challenging quarter, we remain confident in our long-term strategy and the strength of the earnings model that we have built. We are excited about the recent launch of our new brand positioning campaign "Wanna Drive?" that brings our differentiated omni-channel experience to life and underscores our ongoing commitment to empowering the customer. Also, we will continue to drive SG&A efficiency, targeting at least $150 million in incremental SG&A reductions over the next 18 months.”
CarMax CEO, on the earnings call
Forward Guidance & Outlook
CarMax announced plans for incremental SG&A reductions of at least $150 million over the next 18 months, with some savings expected in fiscal 2026 and the vast majority materializing in the exit rate by end of fiscal 2027. Following a September 24, 2025 non-prime securitization transaction upsized to $900 million with off-balance sheet treatment, the company expects a gain on sale of approximately $25 million to $30 million in Q3 income, plus approximately $40 million to $45 million in additional CAF income from servicing fees and retained beneficial interest over the life of the transaction.
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Figures from SEC filings and company reports. Not investment advice.