CarMax, Inc.

CarMax reported first-quarter fiscal 2027 total sales of $8 billion, up 6.2% year over year. Net earnings per diluted share were $1.31 versus $1.38 in the prior-year quarter. Total gross profit was $854 million, down 4% year over year, with used retail margin at $501 million, down 10%, wholesale gross profit at $169 million, up 8%, and other gross profit flat at $184 million. SG&A was $635 million, down 4%, and SG&A per unit leveraged by 7% to $1,619. CarMax Auto Finance income was $140 million, down 1%, and CAF originated $2.4 billion with 43.3% penetration. Management did not give formal full-year revenue or EPS guidance, but said it remains on track to deliver about $35 per unit in incremental EPP margin in FY 2027, and reiterated the $200 million SG&A exit-rate savings target for fiscal 2027. They also said they are standing behind the full-year GPU reduction guidance discussed last quarter, while noting Q1 came in better than that guide.

Keith Barr framed the quarter as early evidence that CarMax’s strategy is working, but said the company still has structural issues to fix in pricing, selection, digital experience and cost. He introduced four pillars—great offering, easy experience, add value on each transaction, and run lean—and emphasized that the company is moving with urgency rather than waiting for the fall strategic update. His tone was confident and constructive, repeatedly saying CarMax has the assets to win, that the strategy is already in motion, and that he expects momentum to continue through the year.

Enrique Mayor-Mora focused on the quarter’s hard numbers and margin mechanics. He highlighted $8 billion in sales, $854 million in gross profit, $1.31 EPS, $635 million of SG&A, and said the company is on track to deliver the $200 million savings target by fiscal 2027 exit rate. He also noted used retail GPU was lowered by less than the $300 per retail unit guidance from last quarter, that EPP margins improved slightly with a full rollout expected by the end of the quarter, and that CAF reserve/provisioning remains consistent with expectations. On capital allocation, he said leverage remains slightly above target range and that returning capital to shareholders remains important, but at the appropriate time.

Analysts focused heavily on how far CarMax can push dynamic pricing/GPU changes, whether the Q1 margin give-up was the right tradeoff for volume, and if management has found the right pricing sweet spot. Management said it is no longer tied to fixed GPU targets quarter to quarter, that pricing will be managed more dynamically based on market and unit-level data, and that the company is willing to give up less margin when the business supports it. Questions also probed SG&A and marketing spend, where management said it is balancing investment with the $200 million savings plan, and CAF credit quality, where Jon Daniels said losses have been in line with expectations and that the allowance increase was driven mainly by seasonality, higher Tier 2 penetration, and held-for-sale activity rather than weakness in the book.