CarMax, Inc. (KMX) shares tumbled sharply, falling as much as 13.33% to $42.54, following the release of its fourth-quarter fiscal 2026 earnings report. The used-car retailer reported a net loss of $120.7 million, or $0.85 per share, a stark reversal from the $89.9 million profit ($0.58 per share) earned in the same quarter a year earlier.
A significant driver of the loss was a $141.3 million non-cash goodwill impairment charge. The company stated this charge was triggered by a sharp decline in its market capitalization, weaker financial performance throughout fiscal 2026, and downward revisions to its long-term outlook.
On an adjusted basis, which excludes the impairment and other costs, earnings per share came in at $0.34. This figure beat the analyst consensus estimate of $0.18. Revenue for the quarter was $5.95 billion, down 1% year-over-year but also surpassing expectations of $5.65 billion.
The core business faced severe margin pressure. Retail gross profit per used vehicle dropped to $2,115 from $2,322 a year ago. Wholesale gross profit per unit fell to $940 from $1,045. The company cut prices to move inventory, which led to a 3% increase in wholesale unit sales to 122,781, but average prices fell roughly $270 per unit, eroding gains. Retail used vehicle unit sales slipped 0.8% to 181,188, with comparable store sales down 1.9%.
Total gross profit declined 9.4% to $605.3 million, while SG&A expenses remained flat at $611.3 million, exceeding gross profit. Income from the CarMax Auto Finance segment also fell 9.8% to $143.7 million due to reduced loan balances and higher credit loss provisions.
In his first quarterly report, new President and CEO Keith Barr emphasized a shift in strategy. "We are moving with urgency to improve execution, drive efficiencies, and sharpen our customer offering," Barr said, pointing to competitive pricing and vehicle selection as key levers. For fiscal 2027, CarMax plans to open four new stores and four reconditioning/auction facilities, with capital expenditures expected around $400 million. The company has also increased its cost reduction target to $200 million in annual savings.
