CarMax has been relatively less affected by the pandemic than many businesses in the auto sector. Luxury retailers have taken a b
CarMax has been relatively less affected by the pandemic than many businesses in the auto sector. Luxury retailers have taken a big hit. But, CarMax, which specializes in selling used mass-market brands, has seen revenues grow. In Q42020, revenues went up by 15% while comparable same-store sales were up 11%.
These numbers did not cover the period beginning from March when most of the store closures happened. However, the company has initiated significant cost-cutting measures such as furloughing more than 15,000 employees as well as halting its stock repurchase program.
One reason to be optimistic about CarMax is the fact that the company had already been quite aggressive in rolling out its e-commerce offering. With footfalls at stores dropping as a result of the pandemic, online sales can help offset the pressure from store closures and reduced footfalls.
CEO Bill Nash, back in September 2019, had said, “The unique and powerful integration of our in-store and online capabilities provides us with a significant competitive advantage that no other used car retailer can offer at our size and scale. We continue to believe that this [approach] will be a more efficient model than our current [one].”
All of these positive developments haven’t gone unnoticed in the market. CarMax’s stock has outperformed the market in April by returning 37% vs the S&P 500’s 13%. The stock has outperformed a market which was quite strong. All eyes will now be on the company’s Q12021 earnings call when the business performance during the pandemic will be revealed. Shares of CarMax, Inc. closed at $74.78 on May 12, up 1.53% for the month.
ig hit. But, CarMax, which specializes in selling used mass-market brands, has seen revenues grow. In Q42020, revenues went up by 15% while comparable same-store sales were up 11%.
These numbers did not cover the period beginning from March when most of the store closures happened. However, the company has initiated significant cost-cutting measures such as furloughing more than 15,000 employees as well as halting its stock repurchase program.
One reason to be optimistic about CarMax is the fact that the company had already been quite aggressive in rolling out its e-commerce offering. With footfalls at stores dropping as a result of the pandemic, online sales can help offset the pressure from store closures and reduced footfalls.
CEO Bill Nash, back in September 2019, had said, “The unique and powerful integration of our in-store and online capabilities provides us with a significant competitive advantage that no other used car retailer can offer at our size and scale. We continue to believe that this [approach] will be a more efficient model than our current [one].”
All of these positive developments haven’t gone unnoticed in the market. CarMax’s stock has outperformed the market in April by returning 37% vs the S&P 500’s 13%. The stock has outperformed a market which was quite strong. All eyes will now be on the company’s Q12021 earnings call when the business performance during the pandemic will be revealed. Shares of CarMax, Inc. closed at $74.78 on May 12, up 1.53% for the month.
