RICHMOND, Va. (AP) _ Car retailer CarMax Inc. said Monday its fiscal first-quarter profit grew 13 percent but missed expectations as sales were hurt by a loss of momentum in April and May. The company also issued cautious second-quarter guidance, as well as a long-term sales outlook.
The nation's largest specialty used-car retailer said earnings grew in the quarter ended May 31 to $39.8 million, or 37 cents per share, from $35.3 million, or 33 cents per share, a year earlier. The results included a gain of 3 cents per share from a CarMax Auto Finance valuation adjustment and public securitization.
Excluding the one-time gain, the company earned 34 cents per share. Analysts expected CarMax to earn 36 cents per share. In May, the company lowered its first-quarter profit forecast to a range of 35 cents to 36 cents per share.
Sales increased 19 percent to $1.58 billion from $1.33 billion last year, as used-car sales rose 6 percent at stores open at least a year, also known as same-store sales, and total used car sales grew 19 percent. But the company said its sales were hurt by a weaker market, as well as higher wholesale auction prices and gas prices.
However, the company's sales managed to squeeze past analyst expectations of $1.55 billion.
``Our sales pace began to lose some momentum in April and weakened further in May, reflecting a softening used car market environment,'' said Austin Ligon, president and chief executive, in a statement. ``In April, we began to take steps to counter the current challenges in the market.''
Those steps included a decision not to increase its appraisal offers in line with a steep increase at major wholesale auctions. The company said this helped keep its retail prices more in line with consumer demand. CarMax also began to bring its inventory in line with its sales pace, and Ligon said inventories are now ``where we want them.''
Despite the lower-than-expected sales in April and May, the company's sales grew across all of its operations except new vehicle sales, which declined 2 percent due to the disposal of five new car franchises.
CarMax said it expects second-quarter earnings of 29 cents to 34 cents per share and same-store used unit sales growth of 3 percent to 9 percent. The low end of the company's earnings guidance is below Wall Street estimates, while the top end is in line with analysts' expectations for a profit of 34 cents per share.
In a filing with the Securities and Exchange Commission on Monday, the company said it expects revenue of $10 billion to $12 billion by fiscal 2010. CarMax also projected annual used-car same-store sales growth of 4 percent to 8 percent during that period, while expanding its store base by 15 percent to 20 percent each year.