Austin Ligon
Austin Ligon
William Austin Ligonis the co-founder and retired CEO of CarMax. He retired in June 2006, and is now a private angel-stage investor. Among his recent investments are Gazelle, Redfin, Rev.com, Car Trade, Eneza Educationand Tazza Kitchen...
NationalityAmerican
ProfessionBusinessman
CountryUnited States of America
benefit car compared continuing dropped employee execution growth increased last levels limited model momentum positive pricing programs quarter reflected reflecting resulted sales strong success sustain third traffic vehicle year
Our third quarter used car sales growth reflected increased traffic compared with last year's third quarter, as well as continuing strong execution. We were able to sustain positive momentum even as the cross-shopping benefit from this summer's new car employee pricing programs waned. Subsequently, new car sales and traffic levels dropped significantly, reflecting the limited model year close-out vehicle availability that resulted from the success of the employee pricing programs.
expect improvement modest per pricing profits unit vehicle wholesale
We expect modest improvement in used vehicle profits per unit as wholesale pricing moderates.
achieved anticipate car comparable currently dates decrease difference domestic expected fiscal growth half increase line lower market opening openings range reflects retail sales second skewed store total unit wholesale
We currently anticipate comparable store used unit growth for fiscal 2007 in the range of 2% to 8%. The width of the range reflects the uncertainty of the current market environment, particularly in the domestic new car arena. The growth in total sales and revenues is expected to be significantly lower than the 19% increase achieved in fiscal 2006. This decrease reflects the difference in store opening patterns. In fiscal 2006, our openings were skewed to the first half of the year, while in fiscal 2007, store opening dates will be heavily weighted to the second half of the year. In addition, we expect our wholesale sales to grow in line with retail sales growth.
broader car declined department discount employee extended following increases performance plan reflecting sales service vehicle
New vehicle sales declined modestly, reflecting the performance of the broader new car marketplace following the end of the employee discount programs. Other sales and revenues benefited from increases in extended service plan revenues and service department sales.
base basic compared corporate expenses four increase increased larger last less maturity moderate net operating percent percentage provide quarter rate sales slightly store stores sufficient third unit
Selling, general, and administrative expenses as a percent of net sales and operating revenues increased slightly to 11.4% in this year's third quarter from 11.3% in last year's quarter. As expected, the moderate rate of increase in unit comps was not sufficient to provide SG&A leverage. Having a larger percentage of our store base comprised of stores not yet at basic maturity and last year's lower-than-normal corporate bonuses were also contributing factors. At the end of this year's third quarter, 49% of our stores were less than four years old, compared with 40% at the end of last year's third quarter.
cents despite earnings favorable finished guidance lower per quarter strong top unusually wholesale
We finished the quarter with earnings of 25 cents per share, at the top end of our guidance range. Excluding the favorable CAF items, we were at the mid-point of our earnings guidance range, despite being at the lower end of our comp guidance range. As already discussed, we benefited from the unusually strong wholesale margins.
believe company creating culture customers experience focused giving respectful
We believe that this recognition is an acknowledgement of how we're revolutionizing our industry. We're giving customers what they want in a car-buying experience by creating a company culture that is focused on being ethical, trustworthy, and respectful of our customers.
adjusting audience entry estimated few help model next overall performance provided represents result sales small smaller store television understand viewing
With an estimated television viewing audience of approximately 185,000, Charlottesville, Va., represents our first entry into a small market. We will be adjusting our store footprint, inventory, and our staffing model in this store, as a result of the smaller overall sales opportunities provided by this market. This store's performance over the next few years will help us better understand our longer-term opportunities in small markets.
area base buy car cars consumers continue easy experience forward fun grow looking opportunity ourselves percent shopping store time
We have revolutionized the way consumers buy cars. This will be the first time northeastern area residents will have an opportunity to experience a no- hassle, no-haggle, fun and easy car shopping experience. As we continue to grow our store base by 15 to 20 percent each year, we are looking forward to introducing ourselves to more and more consumers in the Northeast.
expect few lost nearly next recover resulting sales
We expect we will recover nearly all of the resulting lost sales during the next few months.
against annual comment effort focus longer performance plan report tracking
As previously announced, in an effort to focus on longer-term performance, we will no longer be issuing quarterly guidance. As we report our quarterly results, we plan to comment on how our performance is tracking against our annual guidance.
years issues focus
After careful consideration, we have decided that for our next fiscal year, we'll issue guidance on comparable store used unit sales and on earnings per share only for the full fiscal year. We will no longer issue quarterly guidance. This decision reflects our continuing focus on longer-term store, sales, and earnings growth and on return on invested capital, and our recognition that the performance in shorter-term periods can be more volatile than over the longer term. As we report our quarterly results, we plan to comment on how our performance is tracking against our annual guidance.
growth cost results
Margins on other sales and revenues grew as a result of the growth in extended service plan revenues, which have no associated cost of sales, and the growth in our service margin, reflecting improved overhead expense absorption.
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