Josh Young

Josh Young asked whether the slowdown in sales was primarily due to a lack of customers entering the top of the sales funnel or customers falling out further down the funnel.

Answer

President and CEO Bill Nash stated that web traffic is up year-over-year, and conversion rates further down the funnel are improving. He identified the biggest opportunity as converting initial web traffic into 'selling opportunities,' noting that some visitors are just window shopping while others represent areas for CarMax to improve website stickiness. Jon Daniels, EVP of CarMax Auto Finance, added that conversion rates vary significantly by customer FICO score.

Josh Young asked whether the slowdown in sales was primarily due to a lack of customers entering the sales funnel (top-of-funnel issue) or customers dropping out later in the process (bottom-of-funnel issue).

Answer

President and CEO Bill Nash explained that web traffic was up year-over-year, and conversion rates further down the funnel were improving. The main opportunity lies in converting web traffic into 'selling opportunities' (customers taking actionable steps), which is influenced by both macro factors and CarMax's website engagement strategies.

Josh Young, on for Scott Ciccarelli of Truist Securities, asked if heightened clearance activity drove recent sales and questioned the sustainability of positive comps across all categories, especially discretionary.

Answer

CEO Todd Vasos clarified that there was no heightened clearance activity beyond minor store closure liquidations, which did not materially impact the comp. He attributed the balanced sales growth to strong merchandising in non-consumables and the influx of trade-in customers. He expressed confidence in sustaining this balance, emphasizing that the composition of the comp is as important as the overall number and that the team is focused on driving both consumable and discretionary sales through value and convenience.

Josh Young, on for Scott Ciccarelli at Truist Securities, asked if heightened clearance activity contributed to recent sales and questioned the sustainability of positive comps across all categories.

Answer

CEO Todd Vasos clarified that there was no significant clearance activity impacting comps, aside from some related to a small number of store closures. He attributed the balanced growth across categories to strong merchandising initiatives in non-consumables and the influx of trade-in customers. He emphasized that the balance of value and convenience across the assortment is key to sustaining this performance.

Josh Young, on for Scott Ciccarelli, asked about the extent of price increase requests from vendors and whether Tractor Supply has begun to pass those costs on to consumers.

Answer

CEO Hal Lawton clarified that Tractor Supply is not taking price increases at this time due to market uncertainty. He acknowledged that vendors are incurring the 145% tariff on Chinese goods, which is impacting their balance sheets, and he expects conversations about cost sharing to begin in the coming weeks and months.