Boston, MA 06/23/2014 (wallstreetpr) – CarMax, Inc (NYSE:KMX), a chain of used car dealerships, had a strong 1Q2014 helped by different positive factors. Sales increased in the quarter, and the company also managed to keep its costs and expenses low for the three months trading period. The quarter also benefited from the growth in the auto-financing segment.
Sluggish economy plays a role
The company benefited from the sluggish economic conditions that pushed more customers to the purchase of used cars as opposed to new ones. Increase of store locations also supported higher sales in the quarter. The company opened four new stores 1Q, of which three were in new markets.
The improvement in sales saw the company generated $3.75 billion in the quarter, up 13 percent from the same quarter a year earlier. Analysts expected revenue of $3.59 billion for the quarter.
On the profits front, CarMax, Inc (NYSE:KMX) earned a net income of $169.5 million or $0.76 per share. The profit was up 16 percent on a year-over-year basis. Wall Street expected a profit of $0.67 per share for the quarter. As such, the company exceeded consensus estimates on both the top and bottom line in 1Q.
Stores performance
The quarter saw sales at stores opened for at least 13 months up 3.4 percent. This category of stores provides an important metric because it takes away the volatility of stores that recently opened or closed. The sale of used cars increased nearly 10 percent in the quarter. Sales of new cars increased 33 percent, although new cars represent a smaller portion of the company’s business.
Revenue in the latest quarter also gained support from fees received from CarMax, Inc (NYSE:KMX)’s third-party lenders and strong performance in the auto-financing arm where profits increased nearly 9 percent.
CarMax, Inc (NYSE:KMX) intends to open 13 new stores this year and between 10 and 15 new stores within the next two year. It operates about 135 stores for the sale of used cars and trucks.
