CarMax’s first-quarter results were met with pronounced disappointment in the market, reflecting management’s candid acknowledgment of ongoing challenges. The quarter was characterized by flat sales growth, weaker same-store performance, and a notable contraction in operating margin. Interim Executive Chair Thomas Folliard attributed the muted topline to necessary price reductions, increased acquisition marketing, and digital upgrades to improve customer conversion. CFO Enrique Mayor-Mora highlighted that actions to lower prices and streamline SG&A expenses were intended to ignite sales momentum, but margin pressures persisted as a result. Management acknowledged that performance has lagged the company’s potential, with Folliard emphasizing the importance of price to consumers, underscoring the need for sharper execution on affordability.
Is now the time to buy KMX? Find out in our full research report (it’s free for active Edge members).
CarMax (KMX) Q1 CY2026 Highlights:
- Revenue: $5.95 billion vs analyst estimates of $5.72 billion (flat year on year, 3.9% beat)
- Adjusted EPS: $0.34 vs analyst estimates of $0.21 (60.6% beat)
- Adjusted EBITDA: $191.4 million vs analyst estimates of $145.6 million (3.2% margin, 31.5% beat)
- Operating Margin: 1.1%, down from 2.5% in the same quarter last year
- Locations: 255 at quarter end, up from 250 in the same quarter last year
- Same-Store Sales fell 2% year on year (5.9% in the same quarter last year)
- Market Capitalization: $5.77 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From CarMax’s Q1 Earnings Call
- Craig Kennison (Baird): Asked how new CEO Keith Barr’s hospitality experience would streamline the omnichannel buying process. Barr replied that reducing customer friction is a key focus, drawing from his background in improving click-through experiences.
- Brian Nagel (Oppenheimer): Inquired about the impact of price reductions on demand elasticity. CFO Enrique Mayor-Mora emphasized that price cuts were the main driver of improved sales trends, though all levers—pricing, marketing, and online capabilities—contributed.
- Rajat Gupta (JPMorgan): Asked about the pace and realization of SG&A savings and whether store count rationalization is under consideration. Mayor-Mora said full annualization of cost savings won’t be seen until next year and that all efficiency levers, including store footprint, are under review.
- Sharon Zackfia (William Blair): Queried if CarMax would relax cosmetic standards to improve affordability. Mayor-Mora responded that while ValueMAX inventory has increased, core quality standards will be maintained; additional flexibility is under evaluation to meet customer needs.
- Scot Ciccarelli (Truist): Questioned the balance between margin reduction and investment in digital experience amid SG&A cuts. Barr and Mayor-Mora agreed that efficiency gains and customer experience improvements are not mutually exclusive, emphasizing targeted resource allocation.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will monitor (1) the pace and effectiveness of digital upgrades in driving higher conversion rates, (2) the realization of SG&A and logistics cost savings as the company targets leaner operations, and (3) the adoption and profitability impact of expanded ValueMAX and MaxCare Plus offerings. We will also track updates on strategic planning milestones and any further adjustments to store footprint or product mix as management pursues a more dynamic and customer-centric operating model.
CarMax currently trades at $40.77, down from $49.08 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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