Third-party subprime providers, who purchase subprime financings at a discount, originated 14% of used vehicle unit sales in the current quarter compared with 7% in the prior year quarter. Other sales and revenues declined 1% compared with the prior year’s second quarter, as an increase in extended service plan (ESP) revenues was more than offset by a reduction in net third-party finance fees. Appraisal traffic in the current quarter was higher than in the prior year period however, the appraisal buy rate was lower, which we believe reflected the effect of moderating wholesale vehicle valuations. Wholesale vehicle unit sales declined 2% compared with last year’s quarter, following increases of 23% and 20% in the second quarters of the two previous fiscal years. The used vehicle average selling price was similar to the prior year’s quarter. The comparable store used unit growth was driven by improved conversion, which was supported by better credit offers and continued strong in-store execution. Used vehicle sales improved, with total used units climbing 8% and comparable store used units up 5%. “Net earnings were flat, as the contributions from the growth in retail sales and CAF income were offset by higher SG&A costs, which were pressured by the ramp in our store growth rate, and the tough comparisons in our wholesale operations.” “We are pleased with our improved retail sales in the second quarter, as used unit comps strengthened and we continued to open new stores,” said Tom Folliard, president and chief executive officer. Second Quarter Business Performance Review Net earnings were $111.6 million, or $0.48 per diluted share, compared with $111.2 million, or $0.48 per diluted share, in the second quarter of fiscal 2012.CarMax Auto Finance (CAF) income increased 19% to $75.7 million from $63.8 million in the prior year quarter.Total wholesale unit sales declined 2% in the second quarter.Total used unit sales rose 8% in the second quarter.Used unit sales in comparable stores increased 5% for the quarter.Net sales and operating revenues increased 7% to $2.76 billion from $2.59 billion in the second quarter of last year.(NYSE:KMX) reported results for the second quarter ended August 31, 2012.
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