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CarMax Earnings Preview: 3 Trends to Watch | Nasdaq.com

Customer traffic
CarMax’s growth has been a mixed bag lately. Comparable-store sales gains slowed to a 5% pace in the second quarter from 8% in the prior quarter . On the bright side, CarMax converted more of its shoppers, both online and in its stores, into buyers. The retailer also enjoyed a 17% traffic boost to its website last quarter. However, those wins were offset by a stubborn drop in customer traffic at stores that will need to be reversed before growth can speed back up  toward 8%.

Meanwhile, investors won’t celebrate higher sales volumes unless they happen in the context of steady, or rising, profitability. And to judge the strength of the business on this score, keep an eye on CarMax’s profit per vehicle. The company’s “no-haggle” pricing strategy helps keep this metric steady. In fact, CarMax routinely logs between $2,100 and $2,200 of profit per vehicle, and so it isn’t likely to break out of that range this quarter.

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CarMax Earnings Preview: 3 Trends to Watch – Nasdaq.com.

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