CarMax Reports Third Quarter Fiscal Year 2026 Results
CarMax, Inc.today announced its financial and operational results for the third quarter of fiscal year 2026, which ended November 30, 2025. The quarter saw notable leadership changes, operational adjustments, and ongoing strategic initiatives designed to strengthen the company’s market position and prepare for long-term growth.
Third Quarter Highlights
- Leadership Transition: Effective December 1, 2025, CarMax implemented key leadership changes. David McCreight, a member of the Board of Directors, was appointed Interim President and Chief Executive Officer, while Tom Folliard, Chair of the Board, assumed the role of Interim Executive Chair. The Board has initiated a search for a permanent CEO to lead CarMax into its next phase of growth.
- Retail Performance: Retail used vehicle unit sales decreased 8.0% year-over-year, while comparable store used unit sales declined 9.0%. Despite the decrease in sales volume, gross profit per retail used unit was $2,235, down $71 from the third quarter of fiscal 2025, yet remaining consistent with historical averages.
- Wholesale Performance: Wholesale vehicle unit sales decreased 6.2%, reflecting challenging market conditions. Gross profit per wholesale unit declined $116 to $899, primarily due to steep market depreciation affecting both margin and volume.
- Extended Protection Plans (EPP): EPP margins remained stable at $570 per retail unit, consistent with the prior year, despite lower retail unit sales.
- Vehicle Acquisitions: CarMax purchased a total of 238,000 vehicles from consumers and dealers, representing an 11.7% decline from the previous year. Of these, 208,000 vehicles were sourced directly from consumers, down 12.1%, and 30,000 were purchased through dealers, down 8.6%.
- SG&A Expenses: Selling, general, and administrative (SG&A) expenses increased slightly by 1.0% to $581.4 million. This increase was driven by higher advertising spend to support the company’s new brand positioning campaign and restructuring charges related to the CEO transition and workforce reductions in the Customer Experience Center (CEC). CarMax remains on track to achieve at least $150 million in SG&A exit rate savings by the end of fiscal 2027.
- CarMax Auto Finance (CAF): CAF income grew 9.3% to $174.7 million, supported by strategic securitization activities and continued loan servicing gains.
- Net Earnings: Net earnings per diluted share were $0.43, compared to $0.81 in the prior year’s third quarter. Earnings were impacted by $0.08 per share from restructuring charges associated with leadership changes and workforce reductions.
- Share Repurchase Activity: During the quarter, CarMax repurchased 4.6 million shares of common stock for $201.6 million. As of November 30, 2025, the company had $1.36 billion available under the existing repurchase authorization.
Interim CEO Commentary
David McCreight, Interim President and CEO, commented on the quarter:
“I’m honored to serve as Interim President and CEO at this pivotal time for CarMax. Our unparalleled physical and digital infrastructure, national brand recognition, and award-winning culture provide us with unique advantages in the automotive retail industry. Despite these strengths, recent results indicate the need for organizational change. Tom and I are committed to positioning CarMax for continued success while the Board conducts a thorough search for the permanent CEO who will lead our company forward.
Detailed Business Performance Review
Overall Sales Performance
Combined retail and wholesale used vehicle unit sales for the third quarter totaled 297,160 units, representing a 7.2% decline compared to the third quarter of fiscal 2025.
Retail Used Vehicle Sales
Total retail used vehicle sales declined 8.0% to 169,557 units. Comparable store used unit sales decreased 9.0% year-over-year. Retail revenues fell 7.0% relative to the prior year, driven primarily by the lower volume of units sold.
Wholesale Vehicle Sales
Wholesale unit sales totaled 127,603 units, down 6.2% from the prior year. Both wholesale volume and revenues were adversely affected by rapid market depreciation. Gross profit per wholesale unit declined $116 to $899, reflecting lower margins and reduced volume.
Vehicle Acquisitions
CarMax purchased 238,000 vehicles during the quarter, down 11.7% year-over-year. Consumer purchases totaled 208,000 vehicles, a decline of 12.1%, while dealer acquisitions decreased 8.6% to 30,000 vehicles. These reductions reflect ongoing market pressures and the company’s strategic approach to inventory management.
Digital Sales Channels
CarMax’s digital infrastructure continues to play a pivotal role in sales. In the third quarter, digital capabilities supported 81% of retail unit sales. Omni-channel sales accounted for 69%, and online-only retail transactions represented 12% of total retail sales.
Gross Profit Analysis
Total gross profit for the quarter was $590.0 million, a 12.9% decrease compared to the third quarter of fiscal 2025.
- Retail Gross Profit: Retail used vehicle gross profit declined 10.8% from the prior year, with gross profit per unit at $2,235. While this figure is below last year’s record, it remains consistent with historical norms.
- Wholesale Gross Profit: Wholesale gross profit decreased 16.9% year-over-year due to lower unit volumes and reduced gross profit per unit. Market depreciation significantly impacted wholesale margins.
- Other Gross Profit: Revenue from EPPs and other services decreased 16.0%, primarily driven by reduced retail unit sales.
Selling, General, and Administrative Expenses
SG&A expenses totaled $581.4 million, a 1.0% increase from the prior year. The increase was primarily attributable to:
- Increased advertising to support the new brand positioning campaign
- Restructuring charges associated with leadership transition and CEC workforce reductions
These increases were partially offset by lower corporate bonus accruals. SG&A as a percentage of gross profit rose to 98.5% in the third quarter, compared with 85.0% in the prior year, reflecting the decline in gross profit.
CarMax remains on track to achieve $150 million in SG&A exit rate savings by fiscal 2027, beginning with a reduction in the CEC workforce during the current quarter.
CarMax Auto Finance (CAF) Performance
During the third quarter, CAF completed its second non-prime securitization transaction of the year, totaling $900 million in notes. For the first time, the transaction included the sale of most residual financial interest to third-party investors, resulting in off-balance-sheet treatment. CarMax recognized a $27.0 million gain on sale, along with an additional $5.0 million in CAF income from servicing fees.
CAF income increased 9.3% to $174.7 million, offsetting declines in interest margin dollars caused by lower auto loans outstanding post-securitization. Provision for loan losses was $73.4 million, slightly higher than $72.6 million in the prior year.
As of November 30, 2025, the allowance for loan losses stood at $474.8 million, representing 2.87% of auto loans held for investment, down from 3.02% as of August 31, 2025. The total interest margin percentage remained at 6.2%, in line with the prior year. CAF financed 42.6% of retail units sold during the quarter, slightly below 43.1% in the previous year, with a weighted average contract rate of 11.0%, down from 11.2% last year.
Share Repurchase Activity
CarMax repurchased 4.6 million shares of common stock for $201.6 million during the third quarter. As of November 30, 2025, the company had $1.36 billion remaining under its current repurchase authorization.
Store Expansion
During the quarter, CarMax opened two new retail locations in Tulalip, Washington, and Rogers, Arkansas, expanding its national footprint and continuing to invest in physical retail infrastructure alongside its digital channels.
Preliminary Fourth Quarter Outlook
Looking ahead to the fourth quarter of fiscal 2026, CarMax expects several initiatives to improve sales trends and overall performance:
- Price Competitiveness: The company plans to lower retail used vehicle margins to enhance competitiveness and attract additional buyers.
- Marketing Investments: Marketing spend is expected to increase on a total unit basis compared to the prior year, although at a slower pace than in the third quarter. Efforts will focus on acquisition strategies to drive both vehicle purchases and overall sales.
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