(Reuters) - CarMax Inc (KMX.N) posted a quarterly profit below market expectations as a dearth of vehicles, a lingering effect of the 2008 recession, dragged on the largest used car retailer in the United States.
Shares of the company, which sells cars to retail and wholesale customers, fell as much as 8 percent to $29.43 in morning trade on the New York Stock Exchange.
“We do believe the decrease in the supply of used vehicles since 2008 has adversely impacted our sales over the last couple of years,” CEO Thomas Folliard said on a conference call with analysts.
CarMax benefited as more consumers bought used cars during the recession. But a slump in new car sales during the tough times has led to a shortage of used cars for dealers today.
“Their bread and butter is 0-to-4 year old cars and there’s fewer of them” out there, Stephens Inc analyst Rick Nelson told Reuters.
CarMax earned 48 cents per share for the second quarter, the same as a year earlier. Analysts expected earnings of 52 cents per share, according to Thomson Reuters I/B/E/S.
The company said it bought fewer cars from people visiting its stores for the second consecutive quarter.
It bought cars from 28 percent of prospective sellers in the quarter ended August 31, down from a buy rate of 30 percent a year earlier, as declining prices put off sellers.
Wholesale car pricing fell 2 percent to $5,133, the second quarterly fall in a row.
Wholesale vehicle sales also fell 2 percent, to 82,771. Sales to independent dealers had risen 23 percent in the same quarter a year earlier.
CarMax, which began as a unit of the now-bankrupt Circuit City Stores, said general costs rose 11 percent as it opened three new stores in the quarter.
The company, which competes with America’s Car-Mart Inc (CRMT.O), said it plans to open five more stores in the current fiscal.
Richmond, Virginia-based CarMax also sells new vehicles under franchise agreements with Nissan Motor Co (7201.T), Toyota Motor Corp (7203.T) and Chrysler Group LLC. The new car business accounts for about 2 percent of the company’s total revenue.
Reporting by Sagarika Jaisinghani in Bangalore; Editing by Sriraj Kalluvila