By Dhirendra Tripathi
Investing.com – CarMax (NYSE:KMX) shares lost more than 6% on Thursday after reporting disappointing earnings.
CarMax's shares are not very far from their 52-week high of $136.49.
February quarter earnings at the user car retailer fell 2.3% from a year ago, to $209.9 million. This was even as revenue rose 4%, to $5.16 billion.
A major cost factor behind the fall in earnings was an almost 15% rise in selling, general, and administrative expenses to $556.1 million. As a percentage of net sales, they rose by 100 basis points to 10.8%.
The company also warned about the dangers that a Covid-19 health crisis poses for its business.
CarMax is buying the remaining stock of Edmunds, an online guide for automotive information. The enterprise value of Edmunds has been pegged at $404 million, including the $50 million CarMax paid for an initial stake in January last year.
In 2020, Edmunds generated unaudited revenue of around $140 million. The transaction is expected to close in June.