CarMax Posts Q3 Loss On Plummeting Sales

December 19, 2008 8:40 p.m. EST

Richmond, VA (AHN) - CarMax Inc. announced Friday it swung to a net loss in its fiscal third quarter as sales dropped 23 percent and revenue from financing fees was cut in half.

The auto retailer posted a net loss of $21.9 million or 10 cents a share, compared to a profit of $29.8 million or 14 cents a share in the same period a year earlier. The result drastically missed analyst estimates for a penny a share profit, according to Thomson Reuters.

Revenue fell to $1.46 billion in the quarter, down 23 percent from $1.89 billion last year. Total unit sales volume dropped 17 percent, while same-store sales tumbled 24 percent compared to last year.

The drop in sales also weighed on the company's third party finance fees, down 58 percent in the quarter.

CarMax's finance unit struggled on a whole, posting a $15.4 million net loss in the quarter due to write-downs and adjustments related to bonds and existing loans.

"During the third quarter, the most significant factor affecting our sales was a sharp decline in customer traffic," said Tom Folliard, president and chief executive officer, in a press release.

"While traffic fell by slightly more than our 24% decline in comparable store used unit sales, solid execution by our store teams allowed us to improve our conversion rate compared with last year's third quarter," he added.

CarMax did not offer earnings guidance for the full-year due to the uncertain consumer market and volatile asset-backed credit markets.