How much of the improvement in used car unit comps can be attributed to price investments, and how should we think about these investments going forward?

Enrique Mayor-Mora stated that while pricing, increased marketing, and online improvements all contributed, lower pricing had the biggest impact on the positive sales trend. He noted that the results were in line with expectations and that the company has a deep understanding of price elasticity, which they are not disclosing externally. “But of those items, we do believe that our lower pricing had the biggest impact on the quarter.”

How much of the $200 million SG&A reduction target will hit this year's P&L, and will the new leadership consider pruning the store footprint?

Enrique Mayor-Mora clarified that some of the $200 million exit rate savings will be recognized in FY27, but full annualization is expected in FY28 due to offsets from reduced corporate bonus and share-based compensation in FY27. He also stated that assessing the store footprint and density will be part of the strategic planning process under the new leadership, with 'a lot on the table'. “As we go through our strategic planning process here with he's new leadership, it's certainly something that we're going to be assessing look, we're going to go through a strategic plan outlook. We're going to come back. And as Keith mentioned in his prepared remarks, we're going to come back at you appropriate time and communicate what those longer-term objectives or what the goals are and the key underpinnings of that strategy.”

Is CarMax considering relaxing cosmetic quality standards to improve affordability, and when can we expect a more concrete strategic plan and metrics?

Enrique Mayor-Mora stated that CarMax has increased its mix of 'ValueMax' (older, higher-mileage) cars to meet affordability demands but will not change overall quality standards. He indicated that a full strategic path forward and key metrics would be communicated shortly after initial planning sessions, with some signals possibly emerging in June. “I think the one thing that we will not change though is absolutely the overall relevant quality standards that we have and that we're known for CarMax is known for a quality car and that will continue.”

KMX

CarMax (KMX) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Feb 2026 (Q4 FY26)· Consumer Discretionary· Apr 14, 2026

Source: earnings call transcript

Executive summary

CarMax Q4 FY26 — Sales Trends Improve, Strategic Review Underway

CarMax reported improved sales trends in Q4 FY26, driven by strategic pricing adjustments and increased marketing, despite a net loss due to non-cash impairments and restructuring. The company is undergoing a strategic review under its new CEO, focusing on enhancing the omnichannel customer experience and driving efficiency. Management is committed to affordability and cost reduction, with a heightened focus on COGS and SG&A efficiencies.

Highlights

Used unit comps improved significantly to -1.9% in Q4 FY26, compared to -6.3% in Q2 and -9% in Q3.
Wholesale unit sales increased by 3% year-over-year in Q4 FY26.
SG&A reduction target for FY27 exit rate increased to $200 million, up from previous guidance of $150 million.
CarMax Auto Finance (CAF) penetration increased to 42.8% net of free day payoffs, up from 42.3% last year.
Extended Protection Plan (EPP) redesign completed testing and national rollout is underway, expected to drive approximately $35 per unit in margins in FY27.

Concerns

Net loss per diluted share was $0.85, compared to $0.58 earnings in the prior year, impacted by a $0.99 non-cash goodwill impairment and $0.20 restructuring charges.
Adjusted EPS declined to $0.34, down from $0.60 a year ago.
Total gross profit decreased by 9% to $605 million, with used retail profit per unit down $207 to $2,115.
CAF income decreased by $16 million to $144 million year-over-year.
Delinquencies and roll rates are higher across the auto lending industry, reflecting consumer stress.

Guidance & targets

Category	Target	Timeline	Confidence
SG&A exit rate reduction	$200 million high materiality	FY27 exit rate	High
Used retail margins	decline at a rate broadly in line with Q4 year-over-year trend high materiality	Full-year FY27	Medium
Used retail margins (Q1 FY27)	closer to $300 per unit year-over-year decline high materiality	Q1 FY27	Medium
EPP margin contribution	approximately $35 per unit medium materiality	FY27	High
SG&A leverage	lever in FY27 medium materiality	FY27	Medium
Capital expenditures	approximately $400 million high materiality	FY27	High
New store openings	4 new stores medium materiality	FY27	High
New off-site reconditioning and auction locations	2 new locations medium materiality	FY27	High
New off-site auction locations	2 new locations medium materiality	FY27	High
CAF penetration growth (Tier 2)	accelerate in FY27 medium materiality	FY27	High
EPP national rollout completion	by Q2 of FY27 medium materiality	Q2 FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Retail Total unit sales declined 0.8%, with used unit comps down 1.9%, marking a strong positive change in trend relative to prior quarters. Average selling price decreased by $114 per unit year-over-year. Used profit per unit decreased by $207 from last year's record high. Used unit comps: -1.9%Average selling price: $26,019Used profit per unit: $2,115	—	-0.8%	—	—
Wholesale Unit sales were up 3% versus the fourth quarter last year. Average wholesale selling price declined by $268 per unit. Wholesale gross profit per unit declined by $105 per unit. Average selling price: $7,776Wholesale gross profit per unit: $940	—	+3%	—	—

KMX operating KPIs by quarter

KMX operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Feb 2026 Q4 FY26	May 2026 Q1 FY27	Aug 2026 Q2 FY27	Change vs prior quarter
Average selling price Retail	—	$27.288K Average selling price was $27,288, a year-over-year increase of $1,168 per unit. Source: earnings call transcript	$27.623K Average selling price was $27,623, a year-over-year increase of $1,630 per unit. Source: earnings call transcript	+1.2%
Average selling price Wholesale	$7,776 Average wholesale selling price declined by $268 per unit to $7,776. Source: earnings call transcript	$8,364 Average wholesale selling price increased by $405 per unit to $8,364. Source: earnings call transcript	$8,036 Average wholesale selling price increased by $145 per unit to $8,036. Source: earnings call transcript	-3.9%
Weighted average contract rate CarMax Auto Finance	11.1% The weighted average contract rate charged to new customers was in line with last year at 11.1%. Source: earnings call transcript	11.3% The weighted average contract rate charged to new customers was 11.3%, relatively in line with last year's Q1. Source: earnings call transcript	11.8% The weighted average contract rate charged to new customers was 11.8%, up 60 basis points from the prior year. Source: earnings call transcript	+0.5 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline	Details
MaxCare (Extended Service Plan)	update	National rollout by Q2 FY27
MaxCare Plus (Extended Service Plan)	launch	National rollout by Q2 FY27

Risks & headwinds

Consumer affordability and inflation stress Ongoing

Delinquencies and roll rates are higher across the auto lending industry; lowest consumer sentiment on record.

Mitigation:CAF is supporting customers and setting provisions accordingly; company is focused on affordability through pricing and COGS efficiencies; dynamic approach to margin management to react quickly to market changes.

Goodwill impairment Q4 FY26 (one-time)

$0.99 EPS impact

Mitigation:Non-cash charge, driven by market capitalization decline and pressured financial performance.

Restructuring charges Q4 FY26 (one-time)

$0.20 EPS impact

Mitigation:Related to corporate workforce reductions and early abandonment of underutilized space, expected to support lower SG&A moving forward.

Annualization of reduced corporate bonus and share-based compensation FY27

Offsets approximately half of FY27 in-year SG&A savings

Mitigation:Full annualization of SG&A savings expected in FY28.

What to watch in Q1 FY27

SG&A exit rate reduction progress

Next quarter / FY27

Current Target increased to $200 million for FY27 exit rate

Target Progress towards $200 million target; clarity on in-year savings vs. offsets

Why it matters

Indicates the company's ability to achieve cost efficiencies and improve profitability, especially given the offsets from bonus/SBC annualization.

Regarding SG&A, we expect FY '27 exit rate reductions of $200 million, an increase over the previous guidance of $150 million. However, the year-over-year savings within FY '27 are expected to be offset primarily as we annualize over the materially reduced corporate bonus and share-based compensation in FY '26.

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Q&A highlights

What are your initial observations as CEO, and how will you apply your hospitality experience to streamline CarMax's click-through digital experience?

Keith Barr expressed enthusiasm for CarMax's culture and associates. He plans to focus on streamlining the omnichannel experience by reducing friction and making it easier for customers, drawing parallels to his experience in hospitality where he focused on reducing clicks and understanding the end-to-end customer journey.

“If it takes us 6 clicks to do something, how can we make it 3? What are the things that really matter most to customers and really understanding that end-to-end customer journey, both online and in-store and how we can streamline those processes.”

asked by Craig Kennison · answered by Keith Barr

3 min read 6 chapters

Detailed narrative

Leadership Transition and Strategic Vision

CarMax welcomed Keith Barr as its new President and CEO, highlighting his experience in hospitality and digital transformation. Barr emphasized a customer-centric approach, focusing on delivering competitive pricing, broad vehicle selection, and a seamless end-to-end experience. His initial priorities include making CarMax the 'obvious and easy choice,' leveraging technology for differentiated experiences and efficiencies, and operating with greater urgency and intention.

A full strategic plan and long-term objectives are expected to be shared in due time, with initial signals possibly in June.

Sales Performance and Affordability Initiatives

The company reported total sales of $5.9 billion, down 1% year-over-year, but noted a strong positive change in trend for used unit comps, which improved to -1.9% in Q4 FY26 from -9% in Q3 FY26. This improvement was attributed to targeted price reductions, increased acquisition marketing, and digital enhancements.

Average retail selling price decreased by $114 to $26,019, reflecting the focus on affordability. Management indicated that pricing had the biggest impact on the sales trend improvement.

Gross Profit and Margin Management

Total gross profit was $605 million, down 9% year-over-year. Used retail profit per unit decreased by $207 to $2,115, while wholesale gross profit per unit declined by $105 to $940. The company expects used margins for FY27 to decline broadly in line with Q4 trends, with Q1 FY27 seeing the largest year-over-year decline of approximately $300 per unit.

Management is taking a more dynamic approach to margin management, focusing on reducing COGS, logistics, and reconditioning costs to support competitive pricing.

SG&A Reductions and Efficiency

SG&A expenses, excluding restructuring costs, were $577 million, down 5% from the prior year. The FY27 exit rate reduction target was increased to $200 million from $150 million. However, in-year savings for FY27 are expected to be partially offset by the annualization of reduced corporate bonus and share-based compensation from FY26.

The company plans to transition its SG&A efficiency metric to a per total unit ratio (retail plus wholesale units) and expects SG&A to lever in FY27, excluding restructuring charges.

CarMax Auto Finance (CAF) Performance and Strategy

CAF originated nearly $1.9 billion, with penetration increasing to 42.8%. CAF income was $144 million, down $16 million year-over-year, primarily due to a reduced held-for-investment receivable base following a $900 million transaction in Q3 FY26. The loan loss provision was $74 million, and net interest margin on the portfolio was 6.3%.

CAF is focused on expanding into the top half of Tier 2 credit spectrum, with penetration in this segment growing from less than 10% a year ago to over 20% exiting Q4 FY26. The company is exploring diversified funding approaches, including residual sales and other alternative vehicles.

Capital Allocation and Store Expansion

Capital expenditures are anticipated to be approximately $400 million in FY27, a material decrease from the past two years. This spend will support long-term growth capacity, including opening 4 new stores, 2 new off-site reconditioning and auction locations, and 2 new off-site auction locations in FY27.

The company repurchased 1.3 million shares for $50 million in Q4 FY26 but has paused share buybacks due to leverage being slightly above its target range, while maintaining $1.31 billion in authorization.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.