Well, well, well. CarMax (KMX) just served up a masterclass in how to tank your stock price in one morning. The used-car giant’s shares nosedived 13% at market open after dropping not one, but TWO bombshells that had investors running for the exits faster than someone fleeing a sketchy car lot.
The CEO Said “Peace Out”
First up: CEO Bill Nash decided he’s had enough. After 30 years with the company and nearly a decade as the big boss, Nash is stepping down effective December 1st. That’s corporate speak for “I’m outta here before things get worse.” He’s also ditching his board seat, which is basically the equivalent of not just quitting your job, but also canceling your gym membership on the way out.
Taking over? David McCreight, a retail veteran who’s bounced around brands like Anthropologie and Under Armour. Meanwhile, former CEO Tom Folliard is coming back as interim Executive Chair – think of it as the corporate equivalent of your parents stepping in when you can’t handle your own mess.
The Numbers Are Ugly
But wait, there’s more! CarMax also dropped their preliminary Q3 results, and spoiler alert: they’re not great. We’re talking an 8% to 12% drop in comparable used-unit sales. That’s like your favorite restaurant suddenly losing most of its customers – not exactly a confidence booster.
Net earnings? A measly $0.18 to $0.36 per share, including $0.09 in costs from this leadership musical chairs situation and some workforce reductions. Translation: they’re cutting people and still barely making money.
Meanwhile, Carvana Is Laughing All the Way to the Bank
Here’s where it gets really painful for CarMax. While they’re busy imploding, their rival Carvana (CVNA) is absolutely crushing it. Carvana just reported a 44% jump in unit sales and a 55% surge in revenue. Their operating income more than doubled. It’s like watching your ex thrive on social media while you’re eating cereal for dinner.
What This Means for You
If you’re holding KMX stock, this probably stings. The stock was already down 50% year-to-date before this latest drama, and now it’s sitting below its 52-week low. William Blair analysts weren’t impressed either, downgrading CarMax to “Market Perform” – which is Wall Street’s polite way of saying “meh.”
The used-car market is tough right now, and CarMax is feeling every bump in the road. While they’re talking about their “strong brand” and “omni-channel infrastructure,” investors seem more focused on the fact that their main competitor is eating their lunch.
Full Q3 results drop December 18th, so we’ll get the complete picture then. Until then, CarMax investors might want to buckle up – this ride isn’t getting any smoother.