CarMax (KMX) Q3 2026 earnings summary

Executive summary

• Leadership transition underway with David McCreight as Interim President & CEO and Tom Folliard as Interim Executive Chair, following the CEO's departure in December 2025; a search for a permanent CEO is ongoing.

• Leadership aims to drive operational improvement, digital transformation, and omni-channel experience, with a focus on narrowing price gaps, enhancing digital sales, and reducing SG&A.

• Near-term priorities include lowering used unit margins, increasing marketing, and implementing cost-saving initiatives.

• Recent results were deemed unacceptable, prompting urgent actions to improve sales, customer experience, and cost structure.

• Digital capabilities supported 81% of retail sales, with omni-channel and online retail sales at 69% and 12%, respectively.

Financial highlights

• Q3 FY26 net sales and operating revenues were $5.79 billion, down 6.9% year-over-year; net earnings were $62.2 million, a 50.4% decrease year-over-year.

• Net earnings per diluted share were $0.43, down from $0.81 last year, including $0.08 in restructuring expenses.

• Total gross profit was $590.0 million, down 12.9% year-over-year; retail used vehicle gross profit per unit was $2,235, down $71.

• SG&A expenses increased 1.0% to $581.4 million, with advertising expense up 36.4% in Q3.

• CarMax Auto Finance (CAF) income rose 9.3% to $174.7 million, aided by a $27 million gain on a non-prime securitization.

Outlook and guidance

• Company plans to lower retail used unit margins and increase marketing spend per unit in Q4 to improve competitiveness.

• SG&A reductions of at least $150 million targeted by end of FY27, with a 30% CEC workforce reduction already implemented.

• Near-term earnings expected to face pressure from margin reductions and increased marketing, but long-term growth anticipated from unit sales, CAF, and ancillary products.

• Capital expenditures for FY26 estimated at $575 million, focused on reconditioning, auction facilities, and new stores.