CarMax Stock Plunges 19.7% After Disappointing Q2 Earnings

CarMax (KMX) shares cratered 19.7% intraday Thursday after the used-car retailer posted fiscal Q2 results that fell far below Wall Street expectations. Revenue declined 6% year-over-year to $6.6 billion, missing the $7 billion consensus, while earnings per share of $0.64 came in well below the $1.03 forecast.

The weakness stemmed from a combination of factors: a 5.4% drop in retail unit sales, lower vehicle prices, and a strategic shift toward lower-margin wholesale transactions. Management's decision to acquire 2.4% fewer vehicles for resale suggests growing caution about near-term demand.

CEO Bill Nash described the quarter as "challenging" but maintained confidence in the company's long-term strategy. CarMax plans to reduce SG&A expenses by $150 million over the next 18 months to cushion the blow from deteriorating profitability.