RICHMOND, Va. (AP) -- CarMax on Friday reported a 16 percent jump in first-quarter earnings as the used car dealership chain continues to open stores at its fastest pace ever and expand its footprint across the U.S.
The results easily beat Wall Street estimates and shares rose more than 14 percent in morning trading.
CarMax Inc., which runs about 135 stores that mainly sell used cars and trucks, earned $169.6 million, or 76 cents per share, for the period ended May 31, up from $146.7 million, or 64 cents per share, a year ago.
The Richmond company said revenue grew 13 percent to $3.75 billion.
Analysts surveyed by FactSet expected earnings of 67 cents per share on revenue of $3.59 billion.
Sales at stores open at least one year rose 3.4 percent. That is a key metric because it strips out the volatility of newly opened and closed locations.
CarMax opened four stores during the first quarter, including three in new markets. It plans to open 13 stores this year and between 10 and 15 in each of the following two fiscal years.
As CarMax touted its recent successes, CEO Tom Folliard highlighted the company's efforts to lower expenses, and improve traffic, execution and gross margins to position it for future growth.
“We learned a lot during the last recession,” Folliard said in a conference call in response to an investor question about protect the company's profits during the inevitable next recession.
“Because of those learnings we've been hyper-focused on not losing that momentum. ... Working on what we do every day and trying to get it better at each of those things is the best defense against a recession.”
Used vehicle unit sales rose nearly 10 percent as the company's average selling price rose more than 3 percent to $20,173. Wholesale vehicle unit sales also increased nearly 10 percent during the quarter. New vehicle unit sales, which make up a smaller part of CarMax's business, increased 33 percent. Other revenue, which includes fees it receives from third-party lenders its customers use, increased 2 percent.
Income from the company's auto financing arm rose nearly 9 percent to $94.6 million in the quarter as it financed more of its customers' vehicles.
Its total gross profit _ its profit after reconditioning and other costs _ grew 12 percent during the quarter. Gross profit per used vehicle sold increased slightly to $2,220 and wholesale gross profit per vehicle rose nearly 7 percent to $1,046.
Expenses increased 8 percent to $313.4 million as the company's store base grew 14.4 percent.
Shares rose $6.30 to $51.58 in morning trading Friday.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .