CarMax’s fiscal first-quarter profit fell to $185.6 million as price cuts the company implemented to help spur sales ate into margins, the used-car retailer said Wednesday. But earnings and revenue both topped analyst estimates, and shares rose 3.6% to $54 in premarket trading.
Net sales and operating revenues climbed 6.2% to $8.01 billion, ahead of Wall Street models for $7.42 billion. Earnings per share of $1.31 easily beat the 91 cents a share that analysts polled by FactSet had expected.
The profit decline reflected the continuation of pricing actions put in place to drive improved sales trends, the company said. Gross profit fell from the year-ago period.
Comparable-store sales slipped 0.8%, a smaller drop than the 2% decline analysts had forecast. Combined retail and wholesale unit sales totaled 392,357, up 3.3% from a year earlier. Sales of used retail units increased slightly, CarMax noted.
Chief Executive Keith Barr said the company has established a turnaround strategy that is producing early results and will continue to be rolled out through the remainder of the year.
Looking ahead, CarMax said it will price its vehicles competitively, work to improve its digital capabilities and in-store experiences, grow profitability and seek to cut costs.