CarMax profit rises, but used-car sales momentum drops

Wed Apr 10, 2013 8:44am EDT

(Reuters) - CarMax Inc (KMX.N), the largest retailer of used cars in the United States, reported a 13 percent higher fourth-quarter profit, but comparable used-car sales grew at a slower pace than the previous quarter.

Comparable used-car sales grew 6 percent, down from 12 percent in the third quarter.

Growth in used-car sales may have fallen in part due to a delay in tax refunds, which could have pushed some sales from February into March, William Blair analyst Sharon Zackfia said in a preview note dated March 27.

CarMax typically sees a boost in sales in February and March, coinciding with the tax refund season as subprime borrowers depend on the refunds for their purchases.

The company's third quarter likely marked the last big year-over-year increase in subprime sales, RBC Capital Markets analyst Scot Ciccarelli said in a preview note.

Net income rose to $107.2 million, or 46 cents per share, in the quarter ended February 28, from $95 million, or 41 cents per share, a year earlier. Revenue rose to $2.83 billion from $2.48 billion.

Analysts on average expected a profit of 46 cents per share on revenue of $2.73 billion, according to Thomson Reuters I/B/E/S.

Total used cars sold rose 12 percent in the quarter, while the number of wholesale vehicles sold increased 7 percent.

CarMax, which specializes in cars that are one to six years old, operates 119 used-car superstores in 59 markets. The company also runs wholesale vehicle auction and auto financing businesses.

Shares of the company were down marginally before the bell. They closed at $41.68 on the New York Stock Exchange on Tuesday.

(Reporting by Prateek Chatterjee in Bangalore; Editing by Roshni Menon)

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