UPDATE 2-Carmax earnings fall as funding costs rise
April 2nd, 2008 | by admin |(Adds detail, background, changes dateline)
DETROIT, April 2 (Reuters) - CarMax Inc (KMX.N: Quote, Profile, Research), thelargest U.S. retailer of used cars, posted a 48 percent drop inquarterly earnings on Wednesday after turmoil in the creditmarket drove funding costs higher for its finance unit.
The Richmond, Virginia-based car retailer also ratchetedback its expansion target for new stores and said it expectedtighter credit conditions would weigh on the results of itsCarMax Auto Finance unit for the next four quarters.
CarMax also gave an earnings-per-share forecast for thefiscal year ended February 2009 that was below the averageanalyst outlook as tracked by Reuters Estimates.
CarMax said it expected net earnings for the fiscal year ofbetween 78 cents per share and 94 cents per share, a wide rangeit said reflected “the uncertainty of current marketconditions, especially in the capital markets.”
Analysts had forecast full-year earnings per share onaverage of 95 cents, according to Reuters Estimates.
For the fourth quarter, net earnings fell 48 percent to$21.8 million, or 10 cents per share. CarMax Auto Financeincome took a pretax $34.6 million hit on retained interestadjustments and higher funding costs.
Total sales rose 9 percent to $2.04 billion.
CarMax said used vehicle sales rose 11 percent in thequarter while its much smaller, new-car retail business sawsales fall 20 percent.
