CarMax, the nation’s largest used-vehicle retailer, reported a stellar fiscal first quarter that ended May 31, and President and CEO Tom Folliard attributed its successful financial performance to a proficient website that has sparked significantly higher customer engagement.
Folliard reported 25% higher web traffic for the quarter. Web traffic up 25%
“First and foremost, I think we have a great website,” Folliard said during the company’s June 20 earnings conference call. “I think we have a great search engine. I think we’ve done a very nice job of making sure when customers are on our site, whether it’s through mobile or desktop or touchscreen that they have a good experience. Clearly, the Internet is becoming bigger and bigger every single year as a source of information. So I think customers just naturally are going to go to the web first. We continue to expand our geographic footprint. So we are in more markets. So we are going to get some growth there as well. So as we grow the company and add more stores and we sell more cars and we get more, kind of more CarMax sports people on the road, I would expect that number to continue to rise as well.”
Improved customer traffic during the first quarter helped same-store sales of used vehicles to rise by 3.4%, and income from CarMax’s auto finance business rose 8.7%, to $94.6 million.
The average retail selling price of a CarMax used vehicle rose 3% in the first fiscal quarter to $20,173, marking the first time it had exceeded $20,000. Folliard attributed the increase to higher-than-typical used-vehicle prices at the wholesale, or auction, level this spring.
Net earnings for CarMax Inc. jumped 16%, to $169.7 million, compared to the first quarter last year.
First-quarter sales increased 13%, to $3.75 billion. CarMax’s retail used-vehicle sales grew 10%, to 150,528 units. Wholesale unit sales also grew 10%, to 97,098.
During the first quarter, CarMax opened four new stores, three in new markets in Rochester; Dothan, Alabama; and Spokane, Washington (the first CarMax store in the Pacific Northwest) and one in the Harrisburg, PA. market. After the first quarter ended, another new store opened in Madison, WI.
Average monthly web visits grew to over 14 million, up 25% compared to the same period last year. Visits to the company’s mobile site represented roughly 30% of total visits while visits using the mobile app represented another 13% of the total.
“Our wholesale has been a little behind resale for a while, but that was up 10% in the quarter,” Folliard said. “Our stores continue to provide a great experience for our customers and they continue to grow. And then we’re opening up stores at a pace that is the fastest that is the fastest pace we’ve ever done before, opening 13 stores this year–I mean 13 last year and another 13 scheduled for this year.”
CarMax currently runs 136 stores across the U.S. Last month, CarMax reported that the Nissan Altima was the most frequently purchased make and model by its customers in the past two years.