CarMax's omni-channel platform is a key differentiator, with approximately 80% of customers leveraging digital capabilities to complete their transactions in fiscal 2025. Fully self-progressed online sales grew by 25% in fiscal 2025, indicating strong adoption and effectiveness of digital initiatives.

The company opened 5 new stores in fiscal 2025, bringing the total to 250 used car stores, and plans to open an additional 6 stores and 4 stand-alone reconditioning/auction centers in fiscal 2026. This expansion aims to balance capacity and drive efficiencies across the network.

CarMax Auto Finance (CAF) began testing new full-spectrum credit scoring models in fiscal 2025, with a measured expansion into Tier 1 originations in March 2025. This strategy is expected to grow CAF penetration by 100 to 150 basis points in the near-term, aiming to capture additional finance economics and drive sales.

Management achieved savings of approximately $125 per unit in fiscal 2025 across its logistics network and reconditioning operations, exceeding the initial target. An additional $125 per unit saving is anticipated for fiscal 2026, supporting affordability for customers and bolstering margins.

Selling, General and Administrative (SG&A) expenses as a percentage of gross profit improved to 84.0% in fiscal 2025 from 84.3% in fiscal 2024. Excluding a prior-year legal settlement, SG&A leveraged by 270 basis points, indicating effective cost management relative to gross profit growth.

The provision for loan losses increased to $334.7 million in fiscal 2025 from $310.5 million in fiscal 2024, driven by unfavorable loss performance from 2022-2023 originations. Management proactively adjusted loan loss reserves and enhanced payment extension policies to mitigate risks and align with industry levels, demonstrating responsiveness to challenges.

The used vehicle marketplace is undergoing significant changes, including increasing demand for Electric Vehicles (EVs) and new business models like subscription services. Failure to effectively adapt business operations, including sourcing and reconditioning EVs, could materially adversely affect sales and results of operations.

The automotive retail industry remains sensitive to U.S. economic conditions such as inflation, interest rates, and consumer credit availability. These factors can lead to challenges in vehicle affordability, lower sales, decreased margins on units sold, and increased costs to acquire used vehicle inventory.

The rapid evolution and increased adoption of AI and other evolving technologies may increase the company's level of cybersecurity risk. Any security breach involving confidential information could damage reputation, lead to litigation, and materially adversely affect business operations and financial results.

CarMax sold 789,050 used vehicles at retail and 544,312 vehicles at wholesale in fiscal 2025, solidifying its position as the nation's largest retailer of used cars and one of the largest operators of wholesale vehicle auctions. This scale provides a competitive advantage in inventory sourcing and sales.

The company's omni-channel platform, allowing customers to buy online, in-store, or a seamless combination, combined with its no-haggle pricing and customer-friendly sales process, continues to be a principal competitive advantage. This approach aims to provide the most customer-centric car buying and selling experience.

External title data indicates that while CarMax's year-over-year market share came under pressure during the first half of fiscal 2025, it recovered with accelerating gains through the second half, showing particular strength in vehicles aged 0 to 4 years. This suggests resilience in a competitive market.

CarMax achieved $125 per unit in savings during fiscal 2025 through incremental efficiency opportunities in its logistics network and reconditioning operations. The company anticipates achieving another $125 per unit in fiscal 2026, demonstrating a sustained focus on cost management.

Digital tools and AI-powered virtual assistant 'Skye' now independently answer over half of customer questions, reflecting a 20%+ year-over-year improvement. These systems enhance consumer shopping experiences, support conversion, and enable associates to be more efficient, contributing to operational leverage.

CarMax operates two stand-alone reconditioning facilities and one stand-alone auction facility, in addition to its stores. These locations are utilized to balance production capacity and drive efficiencies across the network, optimizing operational flow and reducing overhead.

As of February 28, 2025, CarMax had 1,481 technology, product, and data science associates, reflecting an evolution in its workforce to support digital capabilities. The company has created rotational programs for college technology hires and a reskilling program, indicating a commitment to internal innovation capacity.

CarMax leverages advanced data science, AI, and machine learning capabilities to optimize its business and enhance the customer experience. This includes proprietary pricing algorithms that adjust vehicle prices to balance sales, inventory turns, and gross profit, selling 99% of inventory at retail.

The company rolled out new systems in fiscal 2025, including order processing, online customer accounts, and EV research/shopping tools on its websites. These efforts are aimed at enhancing consumer shopping experiences, supporting conversion, and improving associate efficiency, driving digital transformation.

Capital expenditures totaled approximately $467.9 million in fiscal 2025, up from $465.3 million in fiscal 2024. This spending is primarily driven by investments in growth capacity initiatives, new store openings, and future long-term growth in offsite reconditioning and auction facilities.

CarMax repurchased $428.5 million of common stock in fiscal 2025, a significant increase from $94.1 million in fiscal 2024. As of February 28, 2025, $1.94 billion remained available under the board's $2 billion authorization, indicating management's continued belief in the company's valuation.

Interest expense decreased to $107.9 million in fiscal 2025 from $124.8 million in fiscal 2024, primarily due to the payoff of a $300 million term loan in May 2024. This action reduces outstanding debt balances and improves the company's capital structure.

CarMax emphasizes a culture of integrity and respect, reflected by its recognition for 21 consecutive years as one of Fortune magazine’s 100 Best Companies to Work For®. The company annually reviews pay equity and ensures all associates are paid above the applicable minimum wage, demonstrating strong social responsibility.

The company has an Associate Experience Team and Advisory Group dedicated to fostering an inclusive and engaging workplace. Biannual associate voice surveys are conducted, with focused plans created to improve engagement, indicating a commitment to social responsibility and human capital development.

CarMax is subject to evolving regulations and disclosure requirements related to environmental, social, and governance matters. Failure to meet environmental goals or satisfy disclosure requirements could result in reputational harm, civil penalties, and significant expenses, highlighting a key sustainability risk.

The U.S. used car marketplace is highly fragmented with over 18,000 franchised dealers, alongside online platforms, independent dealers, and private parties. This intense competition necessitates CarMax's continuous adaptation and differentiation to maintain its market position.

The business is sensitive to U.S. economic conditions, including interest rates, inflation, and consumer credit availability, which can negatively impact demand for vehicles and affordability. These factors could lead to lower sales and decreased margins, reflecting ongoing market challenges.

The increasing use of digital and online tools for car buying and selling, coupled with growing demand for EVs, is fundamentally changing the automotive retail industry. CarMax acknowledges the need to adapt its business model to source and recondition EVs and enhance digital capabilities to remain competitive.