CarMax flags lower margins, higher marketing spend; shares slide

Investing.com -- CarMax Inc (NYSE: KMX) shares slipped over 4% in Thursday premarket trading after the company flagged plans to lower retail margins and step up marketing spend in the current quarter, while its third-quarter sales exceeded analyst estimates.

The car retailer reported earnings of $0.43 per share for Q3 of fiscal 2026, above the consensus estimate of $0.37. Revenue slid around 7% year-over-year to $5.8 billion, but above expectations of $5.69 billion.

Retail used unit sales fell 8% from a year earlier, while comparable store used unit sales declined 9%.

Looking ahead, CarMax offered a preliminary outlook for its fiscal 2026 fourth quarter, outlining steps aimed at improving sales performance trends. The company said it expects to improve price competitiveness by lowering retail used unit margins in the quarter.

It also plans to increase marketing spend on a total unit basis compared with a year earlier, though to a lesser extent than in the third quarter. The focus will be on customer acquisition to drive both vehicle purchases and sales, as the company looks to stabilize demand.

Additionally, CarMax announced leadership changes effective December 1, 2025. Board member David McCreight was named interim president and chief executive officer, while board chair Tom Folliard will serve as interim executive chair. The company said a search for a permanent chief executive is underway.

“I’m honored to serve as Interim President and CEO at this important juncture for CarMax. Our unmatched physical and digital infrastructure, beloved national brand, and award-winning culture provide us with incredible advantages," said McCreight.

"Despite these advantages, based on recent results, it is clear CarMax needs change,” he added.

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