New Vehicle Discounts Hurt CarMax's 4Q Traffic but We Don't See That as Sustainable
We are not changing our fair value estimate on CarMax after the company reported fourth-quarter fiscal 2018 results that showed considerable weakness in store traffic. We don't think our thesis is impaired nor do we think CarMax’s ability to generate a midcycle operating margin of 6% is at risk because of these results. The company’s comparable store unit growth was horrible at negative 8%. This rate was the worst since first quarter of fiscal 2010 and the first negative comparable since third q...CarMax is a holding company. Through its subsidiaries, the company is engaged as a retailer of used vehicles. The company operates in two segments: CarMax Sales Operations, which sells used vehicles, purchases used vehicles from customers and other sources, sells related products and services, and arranges financing options for customers; and CarMax Auto Finance, which consists of finance operation that provides vehicle financing to customer buying retail vehicles from the company The company's products and services include retail merchandising, wholesale auctions, extended protection plans, reconditioning and service, and customer credit.
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