CarMax Inc. posted a 12-percent surge in net profit in the third quarter ending Nov. 30, 2013 to $106.5 million, thanks to increased used-car sales and higher income at its captive finance unit. The company also logged a 13-percent rise in revenues to $2.94 billion in the same period. The company’s captive finance unit, CarMax Auto Finance, also recorded higher net income in the third quarter ending Nov. 30, 2013, to $83.9 million, from $72.5 million in the same period in 2012.
“The earnings growth was driven by double digit increases in total used unit and CAF income,” CarMax chief executive Tom Folliard said in a statement. The company’s used-vehicle unit sales surged to 122,065 in the period this year from 105,815 in the same period in 2012, attributing the higher unit sales to “improved execution in our stores and an attractive consumer credit environment, as well as a modest increase in store traffic.”
CarMax logged a 4-percent rise in wholesale vehicle unit sales third quarter ending Nov. 30, 2013, to 82,743, compared with 79,747 in the same period in 2012. The company said that this reflects the growth in store base. “Other sales and revenues” dropped 5-percent year-over-year with its extended service plan revenues increasing very slightly to $48.8 million from $48.6 million.
CarMax said that growth in retail vehicle sales was offset by a surge in its allowance for extended service plan returns, reflecting increases in extended service plan cancellations prior to the end of their contract term. Net third-party finance fees dropped by $4.6 million, as third-party subprime providers originated 18 percent of used-vehicle unit sales in the third quarter ending Nov. 30, 2013.