CarMax (KMX) Q1 earnings

shares CarMax It fell roughly 8% in midday trading Wednesday after the company beat Wall Street’s quarterly earnings expectations and its new CEO detailed a high-profile turnaround strategy for the company.

The company’s performance is as follows: first fiscal quarterCompared to average estimates compiled by LSEG:

• Earnings per share: $1.31 versus 95 cents expected
• Revenues: 8.01 billion dollars, while the expectation was 7.42 billion dollars

Despite all the negativities, questions remain about the company’s ability to grow and reduce costs under the plan, as it faces challenging market conditions. The used vehicle retailer reported margin pressure and reduced gross profit per retail used vehicle.

CarMax’s total gross profit was $854.4 million, down 4.4% from last year’s first fiscal quarter. The company said retail used vehicle gross profit fell 9.5%, and retail gross profit per used unit was $2,177, down $230 from last year’s all-time record. Its net income rose 6.2% compared to nearly $7.6 billion a year earlier.

CarMax reported net earnings of $185.6 million, down 11.8% from $210.4 million in the same period last year.

CarMax’s shares are still up roughly 25% this year, including a roughly 16% gain since CarMax’s former CEO Keith Barr. InterContinental Hotels GroupHe started running the company on March 16.

Barr said he would announce more details of his plan, which is expected to take several years to implement, in the late fall, but that leadership remains “very confident about it.”

“Our new strategy focuses on great offerings, easy experience, adding value, lean operation, all of which will drive sustainable long-term growth that will again create value for our shareholders,” he told CNBC during an interview.

Barr said he spent his first three months at CarMax better learning the auto business, understanding the company’s operations and identifying areas of potential growth and cost reductions, while also aiming to streamline the car-buying process for customers.

“There is absolutely significant opportunity for growth here by leveraging technology, leveraging our scale, strengthening our stores and also having a truly integrated, growth-focused strategy that will deliver sustainable growth,” he said.

Its first immediate changes include tweaks to CarMax’s website, such as showing monthly payments; implementation of artificial intelligence call agent service; and we strive to make a customer’s experience better, from online to in-store.

Barr was appointed following major stock declines that put pressure on former CEO Bill Nash to resign in November.

Shares of CarMax’s biggest rival to the caravanIt was also down more than 7% in midday trading on Wednesday, coinciding with the online vehicle retailer announcing new dealership plans. Stellantis stores. Carvana’s plan includes using its franchise stores to service vehicles and offer test drives, but it will still only sell its vehicles online even if customers are in stores.

Barr declined to comment on Carvana’s plans, but said CarMax has found that the vast majority of used-vehicle customers still like to visit stores and see the vehicle they plan to buy before doing so.