Carmax Inc
Q3 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +1.85%.
Did KMX Beat Earnings? Q3 2026 Results
CarMax posted a headline earnings beat in its fiscal third quarter of 2026, delivering adjusted EPS of $0.43 against a consensus estimate of $0.32, a 36.08% positive surprise, even as revenue of $5.79 billion fell 13.4% year-over-year despite edging past the $5.63 billion estimate by 2.87%. The results, however, masked a deeply strained operating picture: retail used unit comparable sales dropped 9.0% and SG&A expenses consumed 98.5% of gross profit, up sharply from 85.0% a year ago, as restructuring charges tied to a CEO transition and elevated brand campaign spending weighed heavily on margins. A relative bright spot came from CarMax Auto Finance, where income rose 9.3% to $174.70 million, aided by a $27.00 million gain on the company's second non-prime securitization of the year. The quarter arrives amid securities class action litigation alleging prior management failed to disclose material adverse information. Looking ahead, CarMax expects to lower retail used unit margins to improve price competitiveness while remaining on track for at least $150.00 million in annualized SG&A savings by fiscal year-end 2027.
- Retail used vehicle unit sales decreased 8.0% and comparable store used unit sales declined 9.0%
- Steep market depreciation negatively impacted wholesale volume and gross profit per unit
- Digital capabilities supported 81% of retail unit sales; omni sales were 69% and online retail sales 12%
- CAF income increased 9.3% driven by $27.0 million gain on sale from non-prime securitization
- SG&A increased 1.0% driven by higher advertising spend and restructuring charges
- SG&A as a percent of gross profit rose to 98.5% from 85.0% due to gross profit decline
- Vehicle acquisitions from consumers and dealers down 11.7% to 238,000 units
“I'm honored to serve as Interim President and CEO at this important juncture for CarMax. Our unmatched physical and digital infrastructure, beloved national brand, and award-winning culture provide us with incredible advantages. Despite these advantages, based on recent results, it is clear CarMax needs change.”
CarMax CEO, on the earnings call
Forward Guidance & Outlook
For Q4 fiscal 2026, CarMax expects to improve sales performance trends by lowering retail used unit margins to improve price competitiveness and increasing marketing spend on a total unit basis year-over-year (though to a lesser degree than Q3), with a focus on investing in acquisition to drive buys and sales. The company remains on track to achieve SG&A reductions of at least $150 million in exit rate savings by the end of fiscal 2027.
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Figures from SEC filings and company reports. Not investment advice.