Key Takeaways
- CarMax reported a Q4 net loss of $120.7 million, equivalent to 85 cents per diluted share, primarily due to a goodwill impairment charge totaling $141.3 million.
- Shares declined 6.8% during premarket hours on Tuesday.
- On an adjusted basis, earnings per share reached $0.34, surpassing the Street consensus of $0.18; quarterly revenue hit $5.95 billion versus expectations of $5.65 billion.
- Gross profit margins on retail used vehicles decreased to $2,115 per unit from $2,322 in the prior-year quarter; wholesale margins slipped to $940 from $1,045.
- The company outlined expansion plans including four new retail locations and four reconditioning/auction centers for fiscal 2027, targeting approximately $400 million in capital investments.
Shares of CarMax (KMX) tumbled 6.8% in early Tuesday trading following the used-vehicle retailer’s disclosure of a fourth-quarter loss attributed largely to a substantial $141.3 million goodwill impairment.
🚨 $KMX (CarMax) FY26 Earnings
Used car giant posts soft results amid pricing pressure…
but new CEO + aggressive cost cuts signal turnaround push 👀📊 KEY METRICS (Q4 FY26)
🔹 Combined Retail + Wholesale Units: 303,969 (+0.7% YoY)
🔹 Retail Used Units: 181,188 (-0.8%); Comp… pic.twitter.com/sJaPtmxhVy— Emmanuel – Big Tech & AI Investor (@EmmanuelInvest) April 14, 2026
The company, headquartered in Richmond, Virginia, reported a net loss of $120.7 million—translating to 85 cents per diluted share—for the most recent quarter. This marks a stark reversal from the year-ago period when CarMax generated net income of $89.9 million, or 58 cents per share.
However, excluding the one-time goodwill writedown, CarMax’s performance exceeded Wall Street projections. Adjusted earnings reached 34 cents per share, handily beating the consensus forecast of 18 cents.
Quarterly revenue totaled $5.95 billion, representing a modest 1% decline compared to last year but comfortably ahead of analyst expectations of $5.65 billion.
The goodwill impairment didn’t catch close observers off guard. CarMax attributed the charge to a combination of factors: a significant decline in its market capitalization, underwhelming financial results throughout fiscal 2026, and reduced projections for future performance.
Profitability Per Vehicle Continues Decline
Profitability metrics on individual vehicles showed continued deterioration. Gross profit on retail used cars fell to $2,115 per unit in the quarter, down from $2,322 in the comparable year-earlier period. On the wholesale side, per-unit gross profit dropped to $940 from $1,045.
To accelerate inventory turnover, the retailer implemented price reductions. The strategy generated some results—wholesale unit volume increased 3% to 122,781 vehicles. However, average wholesale selling prices declined approximately $270 per vehicle, offsetting volume improvements.
Retail used vehicle sales volume edged down 0.8% year-over-year to 181,188 units. On a same-store basis, sales fell 1.9%. Average retail transaction prices decreased roughly $110 per vehicle.
Total combined volume across retail and wholesale channels remained essentially stagnant, rising just 0.7% to 303,969 units.
Macroeconomic headwinds have complicated matters. Gasoline prices lingering around $4 per gallon have dampened consumer confidence. This has accelerated interest in electric and hybrid vehicles, creating shifts in used-vehicle market dynamics.
Leadership Change Brings Strategic Pivot
Newly appointed President and CEO Keith Barr utilized his inaugural quarterly earnings announcement to outline a strategic recalibration.
“We are moving with urgency to improve execution, drive efficiencies, and sharpen our customer offering,” Barr stated. He identified competitive pricing strategies and expanded vehicle selection as critical components for regaining market share.
Barr emphasized that the objective is positioning CarMax as “the obvious choice for customers” by delivering superior pricing, maintaining robust inventory levels, and enhancing the overall customer journey.
Looking ahead to fiscal 2027, CarMax outlined growth initiatives including four new retail store openings and four additional reconditioning and auction facilities. The company anticipates capital expenditures of approximately $400 million.
Full-year quarterly revenue declined 1% to $5.95 billion.
Adjusted earnings per share for the full fiscal year dropped to 34 cents from 64 cents in the previous year, underscoring the challenging margin landscape impacting the entire operation.
