CARMAX INC has recently released its 10-Q report. CarMax, Inc. operates as a U.S. retailer of used vehicles and related products through two segments: CarMax Sales Operations and CarMax Auto Finance. Its sales operations include used-vehicle retailing, wholesale auctions, extended protection plans, and vehicle reconditioning and repair, while CarMax Auto Finance provides financing to retail customers across a range of credit profiles.
In Item 2, management said CarMax financed 42.1% of its retail used-vehicle unit sales in the first six months of fiscal 2027 after 3-day payoffs and vehicle returns. As of August 31, 2026, CAF serviced about 1.0 million customer accounts, including a $16.30 billion auto-loan portfolio and $1.20 billion of loans previously sold. CarMax said its sales platform is built around nationwide stores, digital tools, and third-party financing arrangements, with all finance offers backed by a 3-day payoff option.
For the second quarter ended August 31, 2026, net sales and operating revenues rose 19.5% to $7.88 billion, gross profit increased 11.4% to $799.5 million, and CAF income climbed 32.1% to $135.6 million. Net earnings increased 73.3% to $165.3 million, and diluted EPS rose 81.3% to $1.16. Used unit sales increased 13.8% to 227,391, while wholesale unit sales rose 15.9% to 160,344.
For the first six months of fiscal 2027, net sales and operating revenues increased 12.4% to $15.89 billion, gross profit rose 2.6% to $1.65 billion, and CAF income increased 12.9% to $275.8 million. Net earnings climbed 14.8% to $350.9 million, and diluted EPS increased 22.3% to $2.47. Used unit sales totaled 457,684, up 6.5%, and wholesale unit sales reached 322,408, up 12.0%.
CarMax said digitally enabled transactions accounted for 83% of unit sales in the first half, including 69% omni sales and 14% online retail sales. Total vehicle purchases were 631,761, up 0.4%, with dealer purchases rising 11.5% to 88,498 and consumer purchases slipping 1.2% to 543,263.
Management said it paused share repurchases in the fourth quarter of fiscal 2026 when leverage was slightly above target, but leverage improved to the upper end of the target range in the first half of fiscal 2027. The company said it intends to resume buybacks in the third quarter of fiscal 2027 at a modest pace. It also said it remains on track to achieve $200 million in fiscal 2027 exit-rate SG&A savings, with about $6 million of severance expense expected in the third quarter.
CarMax said it is rolling out its Shift into GEAR strategy across four areas: Great Offering, Easy Experience, Add Value and Run Lean. During the second quarter, it said it improved pricing algorithms, scaled AI voice technology to inbound calls, redesigned its car detail page, increased CAF Tier 2 penetration, and expanded its redesigned extended protection plan offering. The company also said it expects used margins for the full fiscal year to decline by less than $200 per unit and that EPP margins increased $27 per unit in the first half, with roughly $35 per unit of incremental EPP margin expected for fiscal 2027. As a result of these announcements, the company's shares have moved 4.74% on the market, and are now trading at a price of $59.23. Check out the company's full 10-Q submission here.
