Christopher Alan Pierce

Christopher Alan Pierce asked if investors should reset retail GPU expectations lower given the recent pricing discussions. He also sought confirmation that the current situation is not comparable to the calendar 2022 period when CarMax had excess inventory and held margins, leading to a longer inventory reset.

Answer

President and CEO Bill Nash maintained that retail GPU for the full year should be similar year-over-year, though Q3 is expected to be below last year's record high and closer to historical averages. He clarified that the current $1,000 depreciation over one month is different from previous $3,000 events over several months, and the company's strategy this time was to drive sell-through, indicating a more nimble response.

Christopher Alan Pierce asked if investors should reset retail gross profit per unit (GPU) expectations modestly lower given the recent pricing discussions. He also sought a comparison of the current inventory and pricing situation to past depreciation events, specifically whether CarMax is prioritizing margin over aggressive pricing.

Answer

Bill Nash, President and CEO, maintained the full-year retail GPU target as 'similar year-over-year' but expected Q3 retail GPU to be more in the historical range, down from last year's record high. He also anticipated wholesale GPU to be similar year-over-year but Q3 to align with historical averages. Mr. Nash clarified that past depreciation events (e.g., $3,000 over months) were more severe than the current $1,000 over a month. He explained that while holding margins made sense in some past events, the current situation warranted aggressive pricing to clear inventory.