CarMax Reports Third Quarter Fiscal Year 2026 Results

Third Quarter Highlights:⁽¹⁾

• Announced leadership changes effective December 1, 2025. Member of the Board, David McCreight, named Interim President and CEO; Chair of the Board, Tom Folliard named Interim Executive Chair of the Board. Search for permanent CEO underway.
• Retail used unit sales decreased 8.0% and comparable store used unit sales declined 9.0%; gross profit per retail used unit of $2,235, a decrease of $71 from last year’s third quarter record, in line with historical averages.
• Wholesale units decreased 6.2%; gross profit per wholesale unit of $899, a decrease of $116 per unit; both margin and volume were impacted by steep market depreciation.
• Extended Protection Plans (EPP) margin per retail unit of $570, in line with the prior year.
• Bought 238,000 vehicles from consumers and dealers, a decrease of 11.7%.
  • 208,000 vehicles were purchased from consumers, down 12.1%
  • 30,000 vehicles were purchased through dealers, down 8.6%
• SG&A increased 1.0% to $581.4 million, driven by increased advertising spend as we launched our new brand positioning campaign and restructuring charges primarily related to our CEO change and workforce reductions in our Customer Experience Center (CEC).
• On track to achieve SG&A reductions of at least $150 million in exit rate savings by the end of fiscal 2027.
• CarMax Auto Finance (CAF) income increased 9.3% to $174.7 million.
• Net earnings per diluted share of $0.43 versus $0.81 a year ago. This quarter was impacted by $0.08 due to the restructuring charges noted above.
• Repurchased $201.6 million in shares of common stock.

Interim CEO Commentary:

“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,” said David McCreight, Interim President and Chief Executive Officer. “Tom and I are committed to positioning CarMax for success while the Board identifies the right permanent CEO to lead CarMax.”

Third Quarter Business Performance Review:

Sales. Combined retail and wholesale used vehicle unit sales were 297,160, a decrease of 7.2% from the prior year’s third quarter.

Total retail used vehicle unit sales decreased 8.0% to 169,557 compared to the prior year’s third quarter. Comparable store used unit sales decreased 9.0% from the prior year’s third quarter. Total retail used vehicle revenues decreased 7.0% compared with the prior year’s third quarter, primarily driven by the decrease in retail used units sold.

Total wholesale vehicle unit sales decreased 6.2% to 127,603 versus the prior year’s third quarter. Wholesale volume was negatively impacted by steep market depreciation. Total wholesale revenues declined 6.3% compared with the prior year’s third quarter driven by the decrease in wholesale units sold.

We bought 238,000 vehicles from consumers and dealers, down 11.7% compared to last year’s third quarter. Of these vehicles, 208,000 were bought from consumers and 30,000 were bought through dealers, a decrease of 12.1% and 8.6%, respectively, from last year’s third quarter.

Other sales and revenues decreased by 9.2%, or $15.2 million, compared with the third quarter of fiscal 2025, primarily reflecting a decrease in EPP revenues driven by a decrease in retail unit sales.

Our digital capabilities supported 81% of retail unit sales. Omni sales⁽²⁾ were 69% and online retail sales⁽³⁾ accounted for 12% of retail unit sales.

Gross Profit. Total gross profit was $590.0 million, down 12.9% versus last year’s third quarter. Retail used vehicle gross profit decreased 10.8% and retail gross profit per used unit was $2,235, in line with historical averages though down $71 from last year’s third quarter record.

Wholesale vehicle gross profit decreased 16.9% versus the prior year’s third quarter, reflecting lower wholesale unit volume and gross profit per unit, which declined $116 to $899 per unit. Like volume, gross profit per unit was impacted by steep market depreciation.

Other gross profit decreased 16.0% primarily reflecting a reduction in EPP revenues due to lower retail unit sales.

SG&A. Compared with the third quarter of fiscal 2025, SG&A expenses increased 1.0% or $5.6 million to $581.4 million, primarily driven by increased advertising spend to support the new brand positioning campaign and severance costs for both the leadership change and CEC workforce reduction, partially offset by a lower corporate bonus accrual. SG&A as a percent of gross profit was 98.5% in the third quarter compared to 85.0% in the prior year’s third quarter, driven by the decline in gross profit.

We are on track to achieve SG&A reductions of at least $150 million in savings in our exit rate by the end of fiscal 2027. We took our first significant step towards these savings this quarter with a reduction in our CEC workforce.

CarMax Auto Finance.⁽⁴⁾ During the third quarter, we executed our second non-prime securitization transaction this calendar year. This transaction was upsized to $900 million in total notes and for the first time included the sale of most of the residual financial interest in the transaction to third party investors, thus resulting in off-balance sheet treatment. As a result, we recognized a gain on sale of $27.0 million in the third quarter. We also recognized an additional $5.0 million in CAF income related to servicing fees from this transaction.

CAF income increased 9.3% to $174.7 million as the gain on sale outweighed a decline in total interest margin dollars due to lower auto loans outstanding resulting from the securitization transaction noted above. This quarter’s provision for loan losses was $73.4 million compared to $72.6 million in the prior year’s third quarter.

As of November 30, 2025, the allowance for loan losses of $474.8 million was 2.87% of auto loans held for investment, down from 3.02% as of August 31, 2025.

CAF’s total interest margin percentage, which represents the spread between interest and fees charged to consumers and our funding costs, was 6.2% of average auto loans outstanding, which includes held for investment and held for sale, in line with the prior year’s third quarter. After the effect of 3-day payoffs, CAF financed 42.6% of units sold in the current quarter, down from 43.1% in the prior year’s third quarter. CAF’s weighted average contract rate was 11.0% in the quarter, down from 11.2% in the third quarter last year.

Share Repurchase Activity. During the third quarter of fiscal year 2026, we repurchased 4.6 million shares of common stock for $201.6 million. As of November 30, 2025, we had $1.36 billion remaining available for repurchase under the outstanding authorization.

Location Openings. During the third quarter of fiscal 2026, we opened two new store locations in Tulalip, Washington and Rogers, Arkansas.

Fiscal Year 2026 Fourth Quarter Preliminary Outlook. We expect the following actions will result in improved sales performance trends:

• Improve price competitiveness: we anticipate lowering retail used unit margins in the fourth quarter.
• Increase marketing spend: we expect marketing spend on a total unit basis to be up year-over-year in the fourth quarter, though to a lesser degree than during the third quarter, with a focus on investing in acquisition to drive buys and sales.

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