Shares in CarMax (KMX) slumped 6% in pre-market trading after the vehicle retailer slid to a Q4 loss following cut prices to boost demand. However, chief executive Keith Barr, in place since February, said its pricing strategy would continue as he vowed to regain “momentum” in the business.
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Decrease in Prices
The group said that total retail used vehicle unit sales decreased 0.8% to 182,188 compared with the same period last year and comparable store used unit sales declined 1.9%. 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%.
Gross profit per retail used unit of $2,115 declined from last year’s record fourth quarter by $207, “reflecting pricing actions implemented to drive an improved sales trend.” It reported a Q4 net loss of $120.7 million or $0.85 per share, compared to a net income of $89.9 million or $0.58 per share, in the prior year.
Pause in Buybacks
It also recorded a non-cash goodwill impairment charge of $141.3 million during the fourth quarter, “driven by the combination of a significant decline in market capitalization resulting from the decrease in its share price and pressured financial performance during fiscal 2026.”
Indeed, its share price has dropped 27% in the last 12 months – see below:
In addition, it said it had paused its share repurchase program in the fourth quarter. However, Barr remains bullish.
“We are moving with urgency to improve execution, drive efficiencies, and sharpen our customer offering,” said Barr, President and Chief Executive Officer. “We will make CarMax the obvious choice for customers through competitive pricing, access to a large selection of high-quality vehicles, and an exceptional end-to-end customer experience. Together with CarMax’s brand and culture, our national scale positions us well to regain momentum and deliver the growth and returns this business is capable of generating.”
As part of that aim, it plans to open four new stores in the 2027 financial year.
Is KMX a Good Stock to Buy Now?
On TipRanks, KMX has a Hold consensus based on 1 Buy, 6 Hold and 2 Sell ratings. Its highest price target is $48. KMX stock’s consensus price target is $37.78, implying a 23.02% downside.
