CarMax (NYSE:KMX), the pre-owned car retailer, posted a more than two-fold rise in quarterly profit, surpassing analyst estimates. The company’s profit for the third quarter ending November 30, 2023, reached $82 million, or 52 cents per share, compared to $37.6 million, or 24 cents per share, in the same period a year ago. The robust performance was attributed to cost-cutting measures that helped offset lower demand for used vehicles. CarMax had faced challenges due to declining used-vehicle demand over the past few quarters as consumers grappled with higher interest rates and increased inventory levels, leading to heavy discounts.
Despite the headwinds, CarMax’s strategic cost management efforts and the resumption of its share repurchase program contributed to the positive results. The company’s shares surged by 7% following the earnings announcement. Analysts noted that affordability challenges for consumers would likely persist in the coming year, but CarMax remains optimistic about the prospects of consumer strength returning.
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