- The Washington Times - Thursday, April 2, 2009

RICHMOND, VA. (AP) - Auto retailer CarMax Inc. said Thursday its fourth-quarter profit jumped 72 percent as lower expenses and a profit in its financing arm offset the impact of falling sales.

The earnings beat Wall Street expectations but revenue fell short. Its shares rose almost 10 percent in afternoon trading.

CarMax said it couldn’t offer a financial forecast for this fiscal year, citing unprecedented declines in traffic and sales and volatility in the credit market.

But it cautioned that if trends do not improve, it anticipates a double-digit decline this year in used car sales at stores open at least a year.

The Richmond, Va.-based company, which operates 100 stores, said it earned $37.5 million, or 17 cents per share, for the three months ended Feb. 28, compared with $21.8 million, or 10 cents per share, a year ago.

Total sales fell 28 percent to $1.47 billion from $2.04 billion a year ago. CarMax said that same-store sales, or sales at stores open at least a year, tumbled 26 percent during the quarter.

Thomson Reuters said analysts it surveyed expected a profit of 2 cents per share on $1.62 billion in sales.

Shares of CarMax rose $1.20, or 9.6 percent, to $13.66 in afternoon trading Thursday. The stock has traded between $5.76 and $21.99 over the past 52 weeks.

“We continue to be negatively impacted by weak consumer demand,” Tom Folliard, the company’s president and chief executive officer, said in conference call with analysts.

Used vehicle sales dropped 26.8 percent, while new vehicle sales fell 41.6 percent, the company said. The average selling price of its used vehicles declined 7.4 percent due to industrywide decreases in used car price.

“While we experienced a small decline in our share of the late-model used vehicle market for the quarter, we gained market share for the full year,” Folliard said. “We believe that our superior consumer offer will allow us to continue to gain share over the long term.”

The company’s auto financing arm posted a profit of $28 million on lower funding costs in the fourth quarter. A year ago, the financing arm lost $1 million due in part to $31.4 million in one-time adjustments related to projected losses for defaulted loans.

CarMax also said it saw a 54.4 percent decline in its third-party finance fees, partially affected by a reduction in unit sales, a shift in providers and arrangements with certain providers.

Expenses for the fourth quarter fell 10.6 percent to $196.7 compared with the year-ago period due to efforts to curb store and corporate overhead costs.

CarMax also said its total number of associates declined to about 13,000 at of the end of fiscal 2009 from a peak of about 16,400 in May 2008.

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