CarMax Reports Fourth Quarter and Fiscal Year 2026 Results

Fourth Quarter Business Performance Review:

Sales. Combined retail and wholesale used vehicle unit sales were 303,969, an increase of 0.7% from the prior year’s fourth quarter.

Total retail used vehicle unit sales decreased 0.8% to 181,188 compared to the prior year’s fourth quarter. Comparable store used unit sales decreased 1.9% from the prior year’s fourth quarter. Total retail used vehicle revenues decreased 1.2% compared with the prior year’s fourth quarter, driven by lower retail used units sold and a decrease in average retail selling price of approximately $110 per unit or 0.4%.

Total wholesale vehicle unit sales increased 3.0% to 122,781 versus the prior year’s fourth quarter. Total wholesale revenues declined 0.1% compared with the prior year’s fourth quarter due to a decrease in the average wholesale selling price of approximately $270 per unit or 3.3%, mostly offset by the increase in wholesale units sold.

We bought 270,000 vehicles from consumers and dealers, up 0.4% compared to last year’s fourth quarter. Of these vehicles, 229,000 were bought from consumers and 41,000 were bought through dealers, an increase of 2.5% and a decrease of 9.5%, respectively, from last year’s fourth quarter.

Our digital capabilities supported 83% of retail unit sales. Omni sales⁽³⁾ were 70% and online retail sales⁽⁴⁾ accounted for 13% of retail unit sales.

Gross Profit. Total gross profit was $605.3 million, down 9.4% versus last year’s fourth quarter. Retail used vehicle gross profit decreased 9.6% and retail gross profit per used unit was $2,115, down $207 from last year’s record fourth quarter, reflecting pricing actions to drive an improved sales trend.

Wholesale vehicle gross profit decreased 7.3% versus the prior year’s fourth quarter, reflecting lower gross profit per unit, which declined $105 to $940 per unit, partially offset by higher wholesale unit volume.

Other gross profit decreased 10.6%, primarily reflecting a reduction in service department margins.

SG&A. SG&A expenses of $611.3 million were in line with the fourth quarter of fiscal 2025 and included $33.9 million in restructuring charges impacting compensation and benefits and occupancy costs, as well as increased advertising expense. These items were offset primarily by a reduced corporate bonus accrual, lower stock‑based compensation expense, and savings from the Customer Experience Center workforce reduction in the third quarter of fiscal 2026. Excluding restructuring charges, which are related to anticipated SG&A savings moving forward, adjusted SG&A expenses were down $33.1 million or 5.4% in the fourth quarter of 2026.

SG&A as a percent of gross profit was 101.0% in the fourth quarter compared to 91.4% in the prior year’s fourth quarter, driven by the decline in gross profit and impacted by restructuring charges. Moving forward we will focus our SG&A efficiency metric on total units (retail and wholesale) instead of gross profit dollars. This metric has stronger alignment to driving unit volumes. In fiscal 2027, we expect to leverage SG&A per total unit when excluding the restructuring charges incurred in FY26.

We have increased targeted SG&A reductions to $200 million in exit rate savings by the end of fiscal year 2027, up from the prior goal of $150 million. We took another significant step towards these savings this quarter with a reduction in our corporate workforce.

CarMax Auto Finance.⁽⁵⁾ CAF income decreased 9.8% to $143.7 million, driven by lower total interest margin resulting from a decline in auto loans outstanding following the $900 million non‑prime securitization in the third quarter, in which most of the residual financial interest was sold, as well as an increase in the provision for loan losses reflecting higher Tier 2 penetration from CAF’s expansion in the credit spectrum. While intended to be highly profitable over time, the required upfront lifetime loss provision is expected to be a near-term headwind. This quarter’s provision for loan losses was $73.9 million compared to $68.3 million in the prior year’s fourth quarter. We also designated a $100 million pool of non-prime loans as held for sale during the quarter, which does not require a loss reserve.

As of February 28, 2026, the allowance for loan losses of $453.0 million was 2.78% of auto loans held for investment, down from 2.87% as of November 30, 2025.

CAF’s total interest margin percentage, which represents the spread between interest and fees charged to consumers and our funding costs, was 6.3% of average auto loans outstanding, which includes held for investment and held for sale, up 10 basis points from the prior year’s fourth quarter. After the effect of 3-day payoffs, CAF financed 42.8% of units sold in the current quarter, up from 42.3% in the prior year’s fourth quarter. CAF’s weighted average contract rate was 11.1% in the quarter, in line with the fourth quarter last year.

Goodwill Impairment. We recorded a non-cash goodwill impairment charge of $141.3 million during the fourth quarter of fiscal 2026, driven by the combination of a significant decline in market capitalization resulting from the decrease in our share price, pressured financial performance during fiscal 2026 and downward revisions to our forecasted financial outlook relative to the prior year’s outlook.

Share Repurchase Activity. During the fourth quarter of fiscal 2026, we repurchased 1.3 million shares of common stock for $50.4 million pursuant to our share repurchase program before pausing additional purchases. For the full year, we repurchased 11.8 million shares of common stock for $631.8 million. As of February 28, 2026, we had $1.31 billion remaining available for repurchase under the outstanding authorization. We remain committed to returning capital back to shareholders over time and may resume share repurchases in the future at any time depending upon market conditions and our capital needs, among other factors.

Location Openings. During the fourth quarter of fiscal 2026, we opened one new store location in Florence, Kentucky and one stand-alone reconditioning/auction center located in Frederick, Maryland.

Fiscal 2027 Capital Spending Plan.For fiscal 2027, we are planning to open four new stores, two stand-alone reconditioning/auction centers, and two stand-alone auction facilities. We expect capital expenditures of approximately $400 million in fiscal 2027 largely reflecting spending to support our future long-term growth in offsite reconditioning and auction facilities, as well as our new stores.

Supplemental Financial Information

Amounts and percentage calculations may not total due to rounding.

Sales Components

Unit Sales

Average Selling Prices

Vehicle Sales Changes

Comparable Store Used Vehicle Sales Changes ⁽¹⁾

Used Vehicle Financing Penetration by Channel (Before the Impact of 3-day Payoffs) ⁽¹⁾

Selected Operating Ratios

Gross Profit ⁽¹⁾

Gross Profit per Unit ⁽¹⁾

SG&A Expenses ⁽¹⁾

Components of CAF Income and Other CAF Information