CarMax Profits Drop on Slow Sales, Tightening Credit
September 22, 2008
The nation's largest used-car dealer, CarMax Inc., reported this morning a 78-percent drop in its profits. The Richmond, Virginia-company blamed the slow economy, which has hurt car sales, and reduced lending by third parties for the fall.
CarMax earned $14 million in the quarter ended August 31, down from $65 million in the year-earlier period. Sales fell 13 percent to $1.84 billion.
This is the fourth consecutive quarterly decline for CarMax. The company, which has delayed the opening of four stores until next year, said the weak used-car market is due to consumers delaying vehicle purchases or shifting to less expensive, more fuel-efficient vehicles because of high gas prices and tighter lending practices.
The company said in its earning statement that it could not forecast fiscal 2009 earnings because of the "unprecedented near-term declines in traffic and sales and the current volatility in the asset-backed credit markets.''
CarMax's stock lost nearly 5 percent of its value in early Monday morning trading. The entire stock market opened lower Monday, as investors await details of Washington's proposed $700-billion bailout of the financial sector.
Posted by Michelle Krebs at 7:12 AM under Business , News | Comments (0) | digg this | Seed Newsvine
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