CarMax Stock Hits 52-Week Low After Q2 Earnings Miss
Used-car retailer's results reflect weaker consumer demand and rising loan loss provisions, fueling economic concerns.
CarMax Inc. (KMX) shares plunged to a 52-week low on Thursday after the used-car retail giant , signaling potential headwinds for the auto market and raising concerns about consumer financial health.
The company announced quarterly earnings per share of 64 cents, a significant miss from the consensus Wall Street estimate of $1.09. Revenue also disappointed, coming in at $6.59 billion, a 6% year-over-year decline and well below the anticipated $7.02 billion. The poor performance sent the stock tumbling over 12% in premarket trading to $50.18.
The weaker-than-expected results were driven by a slowdown across its business segments. compared to the same period last year. Comparable store used unit sales, a key metric for retailers, fell by 6.3%, pointing to declining consumer foot traffic and demand.
Adding to the pressure, to $102.6 million. The company attributed this drop primarily to a higher provision for loan losses, a move that suggests CarMax is bracing for an increase in customers being unable to make their car payments. This trend is a closely watched indicator of broader economic stress.
In response to the challenging market conditions, CarMax executives highlighted cost-cutting initiatives, including a target of at least $150 million in incremental SG&A expense reductions over the next 18 months. Despite these efforts, the significant earnings miss and worrisome trends in sales and loan provisions have cast a shadow over the company's near-term outlook, positioning its performance as a potential bellwether for the health of the American consumer.