CarMax stock tumbles after CEO exit and weak preliminary results

Investing.com -- CarMax (NYSE: KMX) stock fell 11% Thursday morning after the company announced the termination of its CEO and issued preliminary third-quarter earnings that fell significantly short of analyst expectations.

The nation’s largest used car retailer said it expects earnings per share of $0.18 to $0.36 for the third quarter, well below the $0.69 consensus estimate. The company also reported that comparable store used unit sales are expected to decrease by 8% to 12% for the quarter ending November 30.

CarMax announced that CEO Bill Nash is stepping down from his position and board membership, effective December 1. Board member David McCreight has been named Interim President and CEO, while former CEO Tom Folliard will serve as Interim Executive Chair of the Board.

"CarMax is the nation’s largest used car retailer because we have built a business that customers trust. We make car buying and selling simple, transparent, and personalized, backed by a beloved brand, unmatched physical and digital infrastructure and an award-winning culture that affirm the potential of this business. However, our recent results do not reflect that potential and change is needed," said Folliard.

The company cited several factors impacting its third-quarter performance, including declining retail unit sales, sharp depreciation in its wholesale business, and increased marketing spend to support its new brand positioning launch.

CarMax plans to release its complete third-quarter financial results on December 18.

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