CarMax (KMX) 24 Sep 202021 Q2 Earnings call transcript

Good morning. My name is Carol, and I will be your conference operator today. At this time, I would like to welcome everyone to the CarMax Fiscal 2021 Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank like Investor call Relations. now Frole, to turn President, Vice to would over the Stacy I

call. with Thank and and for CEO; Finance; XXXX Vice conference Enrique joining Senior Good Tom Jon our here you. morning Vice CAF Senior President, fiscal Daniels, second and Reedy, our Mayor-Mora, quarter our President President our Nash, CFO; our Bill thank Executive you I'm operations. and today of earnings President Vice

future could comments pursuant XXXX. our Securities prospects today harbor cause you results materially business knowledge In remind projections Company's update our forward-looking intent differ and make providing plans, Act These actual expectations. about from to financial obligation current the we provisions me any other on based them. Company to are performance of Let that disclaims assumptions are the that forward-looking involve or statements, Litigation Reform Private and and regarding events to safe management's uncertainties future statements risks of statements the the and

thank any information in February to back department the you important have contact XX-K issued please call, X-K for could getting the in at only follow-up questions that for question its also please queue see Relations filed and like after on XXXX, year factors advance to affect our more XXX-XXX-XXXX I Investor you the Form feel expectations, free would extension morning fiscal ended report one the the XXXX. follow-up. these on asking Company's for and annual SEC. Form Should XX, with this additional For

we has IR and all you retirement for sure all Bill? is joy Gunther, happiness can personally to part almost XX Celeste, bring. be of moment the will wish retiring our a Celeste program take to integral want from you she'll missed. Celeste CarMax. an I deeply and who been agree, I'm years, Lastly, thank

Stacy. for Great. joining thanks Thank Good you, us. morning, and everyone,

EPS quarter record of the delivered to retail, $X.XX up to wholesale X.X% business: release result CAF. performance with in up XX.X% to this our aspects and a you across morning, billion, earnings read This Net million all our sales $X.XX. As XX% we strength earnings up and of $XXX was

largest I'm the are proud across retailer the profitable required to making rollout nation's has say to also be used entire quarter. level We the and car. most that change of and and been of has offerings. of focus organization. omni-channel We in years this proud a remarkable completed This our our

support customers have staffing and every we of During we to evolved interact with this how we time, nearly our structure how aspect cars. we buy, and business. our deliver sell From our how to

Our a the is personalized us the No used market experience to omni-channel X, position multichannel empowers online a seamless customers retailer is experience addressable a we their car used customer giving in-store on experience, to the experience world-class largest to other the this integration terms. built provide iconic a within the buy deliver as of car world-class experience It that can. way industry. a and designed is car in

results. our to Now turning

and and averaging by quarter, of The web high XX was in the including a August. unit used negative unit solid quarter, traffic, addition factors, environment. operations, result execution in in car sales of both single-digit increase sales June, to in a the improvement variety we second marketing sold growth visits per achieved approximately strengthening which we to finance million solid was in month In In used than used a comps and saw the used carmax.com. of a experienced units For X.X%. X.X% more comp we growth July in offset the total comp positive

from the as targeted we increase demand a saw level the in our was below rapid second our quarter, During first saleable inventory quarter.

have successfully to teams than done any used that ramped I'm our zero record pleased past retailer. a and targeted the inventory in more broad Today, we've car by levels, XX% inventory job of XX-year-old offer We a more quarter. vehicles months, to than buying report nationwide, increasing the phenomenal a For at with salable selection producing of to largest levels, inventory with XX,XXX the focus vehicles providing on vehicles. customers three

Gross quarter, demand This of used for reflecting unit compared profit last $X,XXX we the quarter for to expensive a increased was to older mix, ago. up XX% as $XX percentage XX-year-old and saw customer year a unit sales X XX% vehicles our with less year vehicles. per from per

our the rate. appreciation market For in by was was date a auction by in performance the up by one and buy execution and Volume more excellent supported teams. record wholesale, strong quarter driven X.X%,

record achieved also quarter, the $X,XXX By unit marketplace. return in result the operational appreciation quarter, the wholesale to gross strong of the of of profit we depreciation the We and execution. per saw end

As a throughout reminder, all run continue auctions to the virtually quarter.

recovery our in show, our have substantial a As business. we results achieved

incredible several demonstrated past and change environments in the most of faced. agility ever drive has talented workforce to our months, we've one Over challenging the ability that

the we associates say on furlough. end was longer our back no We team of together had that by July, proud are to again, and

information customer pursue now will hiring provide to point, I'd turn our quarter business, new financial to Enrique? the opportunities. to Enrique, omni-channel performance, enhance actively and we country over our are financing. our more around offerings provide across second Tom, We continue on the like At to additional detail grow as core call and this who

morning, everyone. Thanks, and Bill, good

in quarter. In net the retention we third-party or increase service units million fees the EPP second quarter, which our million by The profit with channel. in profits other revenues our compared XX%, recognized sharing and sales from the year million primarily increase a $X.X profits the a service million from partially In extended ago. CARES maintained Service a profit attributable in in we and mix in X.X%. $X.X tax to by grew recognized increased X.X%, $X.X the finance growth to million prior the plan with EPP $X year shift Act. For were $X.X compared profits or penetration sales the increased benefited by million improved also used or due increase employee quarter, quarter, above largely finance $X.X gross XX% sold. the ESP credit offset

On million SG&A approximately to X% $XXX the to was SG&A expenses used $X $XX a on unit million. front, of per unit per quarter. increased leverage $X,XXX year-over-year the

of X% SG&A $XX and for advance beginning since continued expense Excluding per the the of leverage advertising core expense; omni-channel and platforms our and $XX of stores increase expense spending in quarter base; $XX compensation, the support a which SG&A X.X% the strategic XX growth a were: unit last second technology share-based the stock-based impact compensation store of to in unit. a million Notable drivers or opening our represents was quarter increase second a our initiatives. year, in

pandemic actions Our the overhead the in environment. period certain reducing the our ability and expansion associates aligned of to leverage took the hiring start supported the other right-sized time, to was in costs of decisive and we appropriately paused business quarter. preopening froze costs a SG&A at challenging thereby in functions, by the costs a manage for to store strategy, quarter furloughed We

we we and Examples will of continue opportunity the acquisition. and loss the to an unique of We our improving over or CECs, year-over-year spend customer capitalize to we to favorability we our At recognize that vehicle lower have current deliver areas time. the and in are are customer and remain production. expect of efficiencies ensuring our experience our continue offering. quarter strategic expenses. inventory future, areas same to period omni improvements efficient time, self-insured that experience the in bullish grow experienced position focus sourcing investment evolve we these also share. remain We in our litigation-related targeted very a about Accordingly, in to we centers given include due market of our of We committed as areas and customer on

back this we the We appropriate business shortly. year to with in Two focused allocation growing in marketing key on amount remain perspective, managing half that also of uncertainty increase of the year-over-year spend will in address the which environment. our given while caution a capital the remains Bill the updates. macro From planned

and And balance First, 'XX. planning we the down in the of paid end growth stores to resume new revolver. store XX fully in to to are our outstanding the subsequent FY are we currently X second, quarter, ready for

the solid to access our Given and have we turnaround sheet, balance markets in credit and our strength are the of the we that appropriate liquidity confident business, capital. the

out Finally, I'll cash. of XX% we the netting call turn historical ended now leverage our the debt-to-capital quarter modestly over Tom. adjusted when to XX% target below to

in retail good strong Enrique, conversion and cap everybody. independent tiers, delivered Thanks, and Similar favorable wholesale loss the partner experience. solid all credit in CarMax and morning, of to growth with lenders Finance and our our income Auto business,

X temporary the some made of pandemic, CAF portfolio. goal in financeable discussed, ensuring adjustments previously we the As Tier underwriting with early

have we date. to outlook, are originating July favorably, the cautious began pleased quarter, we normal experienced Payment the well also CAF I through reengaged its channel our trending our we back are was we received. delinquencies extensions ABS remain Consequently, and down are While in transaction the in half significantly, of the with trends our space in just in-house the Tier weeks. any mentioned, and X Based second the business. lending start the X loans at have recent originate in of pandemic curtailed Tier of this not in trends did Tier X the quarter. we spectrum on

up by ago. $X.X Cash were Net of the to was last X-day was cars sold finance. grew X.X% with in of they performance unit compared penetration a significantly year. ago. And loans with to billion a average turn year-over-year. XX.X% increases used year accounted lower by with X X% I'll cash Tier amount quarter. offset to rate payoffs, year penetration Now compared a XX.X% and lower Tier used sales net the XX.X% in for X somewhat XX.X% originated compared XX.X% Year-over-year, as were

loan managed That's provision, plus loan for QX, balance was quarter of X.X% the reduced $XXX.X loan was million. average independent the for average was provision moderately loans focus quarter. contract customers X.X% weighted down to and quarter, For in first from the during with lower a interest X% increased rate drove CAF versus an the of $XX both increase the on for is end our a in margin which as income receivables, lower interest for QX managed of a this an the Portfolio reflected loss ago at of a Total primarily reflects XX% QX. ending in the up rate to X.X%, X.X%, receivables. average which year our reserve originated margin in in The the provision charged Combined growth portfolio of interest average last higher-quality improvement X.X% much in million. X.X% million in in quarter. receivables, managed receivables This losses of percent $XXX and The losses. any to total increase favorability results of margin year. than

and consumer we While July loss favorable the set to of the end the continues reserve at reflect unpredictability experienced environment of its situation. the in in highly loss June, uncertain expectations was August current the to The significantly QX.

Our importance finance diverse in customers results in QX illustrate broad all our of that environments. group of can of a lenders offers continually economic to deliver range high-quality the having

finance contributions In a fully offers to addition, are the that model having difficult captive such to numerous as replicate. business CAF functioning

Now I'll the turn call back to Bill. over

Enrique. Tom, you, Thank Great.

mentioned the the also have the market Along experienced used The largest way. of integration experiences customers with online, give within earlier, As in offering. rollout guidance powerful seeking I along and we to online industry. us the of are our completed the buy person car our ability omni-channel addressable

XXX% customers this help XXX% want consultants want a floor online. to car purchase. Customers providing don't capable and e-commerce a whenever complex and We the capabilities. be with used our Buying in-store personalized of forced experienced sales highly centralized still wherever is considered are and or interact CECs, to uniquely

Our and competitive option much seamlessly little customers advantage in-person is as want. giving as do online as they to the or

and capture focus by we and to are experience technology nationwide, and to a ensure believe now experience previous our quickly the effective are machine superior in that and in us the performance effective our online associate data combine current maturing, data create customer our exceed mark, learning personalized and out customers' is another photo right example we continue the outs. for make and customer our we in And in-store. right the scoring truly meet a although needs. more photos, needs is will experience capability than of rolled a they area how One call studios, leveraging We a optimizing the at the of part advantages, enhancements approximately with right interactions, and customers' an information of relatively evolution, of our and and by While omni becoming early leveraging them Digital An to provide get improving data new that work conversion is feature advantage to is it with have our still XXX-degree unmatched time. future merchandising our rolled model. our of will much customers' year, rates. reconditioning still exterior both its out we CECs. immersive and area this which have is is provide and we interior to opportunity improvement. By meeting XX% We online continuous views, high-quality our end with new more hotspots more

progress on All also leave fully this our We provides upgrade without research as our more a website content vehicle carmax.com. online. to customers continue help ever to confidence customers they to having

provides financing which compare for and have submit of mark curbside they complete process They It can hub selected both to area they the other customers the is here is a online They their car also journey. I online. if and car-buying of their save their home customers vehicles they track in-person. they've the pre-approval an selected can get actual and highlight means manage for finally, or estimate they progress certain that in-store checkout offer book an a hub, And customer delivery omni can can online trade-in. focus aspects can or that pickup. options. made, in or a The They the want and will choose financing our

our received. our this Approximately experience of customers omni-channel CECs has Our been with quarter. interacted well XX%

customers remotely, advantage Again, that business model opted up these addressable our gives to Most have come progress sale experience. their to to progressed still largest the they market. of the about our still their choice XX% their what complete of the our store from Additionally, chose of to for pre-COVID. approximately approximately the is us is experience XX% only. This in-store XX% how an and of as customers transaction, customers customers

of sellers. engagement customer We our we go by We've are from to dealer introduced for omni-channel strength the omni-channel continue and first on focused offering. launched clearly a national we demonstrating future the our solid and for the platform remain a last focus nationwide. We mind campaigns. messaging our our which reinforced choice ensure driving of established digital-only brand on differentiating now brands offering forward, top strategies of campaign Accordingly, year, buyers to brand and will traditional as benefits our and marketing has car

areas Additionally, to SEM, back will in social. our year-over-year be we teams increasing spend and marketing investments messaging, our expand the half as SEO, of in year content and such the

Our customers us goal empowering create properties, multichannel high campaigns. ROI to is while digital to personalized our drive to

in are also our that earnings that exceed unique investing continuing our have to are same experience we a and identifying customers' retail evolve At expectations. growth. solid We customer contributors to time, we to will believe new the we initiatives be

our to maintain recognize great at All they of possible without here to values them of culture and and culture this individuals of but a all I perspectives. future, associates. all very be this would high-performance exciting the leads CarMax, none that a want

history, transformation our the taken we Over every years, of nearly several on past largest evolving have our in the business. aspect company

also each excited accomplished ever what And of We take challenging by live associates proud we'll At every about to other. care questions. I of people it time, day of in our to taking accomplished, ahead. be first this great putting these and we've one the environments happy I'm continued and very your opportunities results am all, have all through values we've our most faced. the

Please of from go [Operator from comes ahead. question Murphy John first Instructions] Our America. this Bank morning

in this release kind the is environment, press it's Bill, there's execution impressive stuff. one intriguing. that of Great statement really in

think was headwind all inventory here term, inventory bring to sort think to different customers and expand some bear inventory addressable kind was change the in relieved in How think September, I'm sales that have quarter. in grows your you and curious just a if saying that, if efforts you you market more dramatically in need omni-channel the as also as a do You're in or historically? than but of sounds you do to like these about it way upon be it degree, fruit inventory near will management of you in. about

John. our first omni it you, think Thank manage I not how inventory. won't all, of Well, omni, Yes. we or change

I the amount a that I bumping mean, it's team. think one the shortage inventory the inventory in sales. to the during tremendous. of headwind Company of the fine-tuned about last our would And any up strengths and say enough that XX be over is normal years, we've can't environment, truly continue. And having significant of quarter think I about XX% I we

having had environment environment, a to than COVID exact competitors that, of hard But sales and I an impacted it there were the light said absolutely normal to other it a we're impact Now inventory. far in on quantify lot other our much of it's from that how think degree sales. are the

there. You had out stimulus some money

inventory of what a I'd So team the saying get producing it's again, the know to go hard that to has job headwind. kind about were we to remarkable today. the really offsets feel of were we But the to light spot we But that back when where on buying into done ended both just and our the us good ended inventory quarter. total today, are We quarter. as We still position.

follow-up and as else Okay. to XX% your in these need omni-channel Or think in quick. I to much XX%, be And real inventory? trend? be just as on there more have efficient efforts I you gauge on and to inventory turning -- you mix? much that? to really inventories, mean, you just bump inventory the XX%, future, just you trying you Or would up the up more Just expands, with efficient would something on need one mean, are off take would go if would XX%, be XX%, go

omni expect is selling be inventory, this Yes. will also cars that I down we'll mean, sell a because the more cars. And our more better this, expect we in more to customer we're went if we reflected path, and we inventory. experience, have

and the -- XX way see I So managed don't last I the years. that the that's deviating. business for we've think

we have inventory. we'll sales, more as So have more

from Blair. Our next William question ahead. Zackfia from Sharon Please comes go

of question I a omni-channel. customer on awareness guess

in measures and that, nationally you marketing of So a bulking I'm glad do going maybe awareness kind that you what to then as up adds hear any But you're broader happen customer be where corollary have to to fiscal around tail. can that year. the Atlanta as the versus the question started? is And

you markets Given do see long relative out, where in to of purchase cycle, a this that tail of early makes recent markets, it rolled continue the is if that those sense? more to you've omni-channel kind

Yes.

really think, have everything CarMax still is let I Sharon, for time the now the know I I in of So that, customers but about awareness. there, a capabilities. think new great of to first lot all, mean, broader is hey, that's we

we marketing unleashed any give point. up going one up this market step specific we but forward. mean I that about campaigns. had reasons to as can't to omni-channel, the of haven't we're awareness I advertising we've really So go some why it is

markets, as our we say, I we great. As seeing feel look the in feel if gains markets. Atlanta far we're the that older We the feel market, about how great -- at

going longer. the great bit we'll going to around traditional it's understand a awareness to -- that and been advertising online the dealers us sure because, going and do forward people feel different, about between competitors. I little obviously, make also be and difference is be message think it's But We the

are to How follow-up. marketing? new we the a just going Bill, quickly see

it see this will later year. You

Baird. question Please Craig ahead. next go from comes from Our Kennison

broader auctions Question was a lower a of at to the Thanks of Celeste, best byproduct support. has buyers that extent to your the then number all GPU much prices like Wholesale geographic How to on you. up higher wholesale increase $XXX. is the a from auction of pivot the wishes process radius? business. for cost to vehicle? digital And what versus

Yes. Craig, yes.

appreciation. So and driven interesting. was a was It's outstanding I of think by wholesale the performance lot it

depreciation COVID time. of in a we very unfolded, period some most saw of short As rapid the

saw most also the We rapid appreciation.

COVID, from of think swing $X,XXX a the probably I depth $X,XXX there's vehicle to in value.

pivoted sales open but So certainly supply, up of physically and We're And tailwind. open the our because local I They lot on them a all when early just lack there the as can the to wouldn't as -- a quickly, back up quarter, them But and up some of Especially sales that, with goal and opened going that in also that's that's of plan as far execution individual as is traditional But the teams weren't got stuff appreciating going running. the well. the the this was of as our virtually. be of team we mandates auctions open obviously, up. minimize and a continue working virtually. ourselves all again, complement through new to auctions we will forward. be simulcast, get our our

that the hopefully as experience look, if quarter, We we're nothing we up. low door I and record it's it's a participants. offer will you little the then traditionally folks think And more proud. XXs. this it that And you lately. by had have of know I hopefully, the digital mean, to because bit, having far think will the digital, the by more your the line. but here in auctions, that. up more drives enhance We lot. As open price impact been at not a rate And price you I We've really were saw can in do by overall

we -- high this what was the with XXs. it quarter, Now saw this

So step it substantial was a up.

Basham Our go from Wedbush comes Seth Please Securities. ahead. from question next

side through is you outlook Can trended? us bit to the your unit quarter? And more your on the profit what it as give gross that little relates a How retail on color per that?

Yes.

I reason that the the quarter. manage think GPU. prove caveat was the to into But that we can continue don't the been profit I pricing I give see and And gross total elasticity going that test most driving I make I the because want able continue consistent we we traditional to able throughout that fairly we've be that mean, range. whole forward GPU of all check to types sure environments, always we're any think wouldn't we in dollar. to different

think I we those a look see GPUs. as can't reason I don't So maintain you why forward,

strategic That's Could color some helpful. you're around you provide a efforts you And more what there? sorting. as follow-up, referencing mentioned some

Yes.

So I think, first to our and foremost, and accelerate want channel. buying we core in prove

both that's U.S., in-store data largest lane. and and annual So think off-site I processes used buyer important not X of the way leveraging in think basis. is about because value appraised the the on but it's our that's the And only more that would cars technology and better. And million I an we we're cars than

to there make continuing incremental So is significant. changes

to businesses. has vehicle want open think that. since and been the acquisition some upgrade And that I other new expand of ona into and auction partnerships also in working some And bucket then area platform buying kind is, capabilities new our we with CarMax. of channels put to We started our I will up platform. it's continue our here auction to I business. invest The time We're wholesale another

is a of So fronts. we about different the it bunch think way on

from question next Please ahead. Our RBC from comes Capital. Scott Ciccarelli go

lift the you've in had then that Bill, generated that of you some capability think way is the about for to And overall in quarters? I a sales quarter? that, performance you your to guess in but the I related can Atlanta the help omni there you omni-channel quantify said for few great feel markets, capabilities size any of markets where usage you your and you older know

Yes.

customers to I has that incrementality I delivered where or who's coming to home, okay, omni want it coming Scott, think and come and really to have us the us we home into They I store. up of to all, that you well, everything they want decide folks "Hey, Because online" the now to end start delivery to the because, online just in instances are difficult of my it delivered anyway. a have because home of First lots or is store it say, you can't by the measure who measure.

it's to a share. us, out measuring because this I most I'd the the the rolling way, believe the how market experience, superior important we think thing deliver us obviously, the is at day, for is sales it. along about they And want this customer of and model that you, But tell the customer. to no end matter is all

alternative despite different So progression, metrics, customers the we'll we'll and customers, at to And some everything but that newer this older that we've They're And received. seen, being be experience only whether the is markets CECs. the it's focused back rolled that continue that, very it inherent delivery be engagement, how really feel this move out, on CEC we go of well or and online we'll markets customers, would looking to in-store about needle. in is having just headwinds, and they those I immature.

We have a lot of new folks there.

them customers to We have to we quickly. migrate this, not expect we as new to did expected And while technology. migrate

actually we this in times. our quarter, more certain we CECs handle than had So at leads could in

a experiences experience that's there's as that customer well. improve So some headwind. think on that probably I we And can

about where and started, are we just the this this So today. -- of as X. of end again, day we kind of the And where feel great about This we is starting we're like we think really of omni, the rollout springboard kind while where is getting future. to it's

comes from go Oppenheimer. Our ahead. Brian next Please question from Nagel

appreciate congratulations. Much over First for it. the the all years. all help off, Thanks Celeste

environment. So Bill, I execution tough very in in listening the it's to my here congrats picture I'm guess, is, question, a on you and today, nature bigger

also your is in positional you almost -- look, path, a -- the you're begin You're leverage I partner your hear and will investments saying now omni-channel a But really crux the moving you're caught that, performing COVID well. of lot you crisis made. with

at demand, maybe now, overall the So step mean, were forward -- of demand if back pre-COVID? the the and you just at don't a I just -- how The you the right? take what would now consumer yourselves characterize going environment, give question, they if you look you recognize I dynamics and versus look kind guidance, just demand

still there's a you can to I imagine, lot answer. look, Brian, It's mean, in a the that's Yes. marketplace. question hard mean, of uncertainty I

We high have, unemployment. obviously,

we rising at year that that month-to-date about wrinkle mean, the think some are, all This -- uncertainties, there we macro got trend the we what could little how at I some continued back external bumpiness tell beyond cases. and look got August going to half are of right for challenges. and But look we a the is continued there we said, with if You've you, great you be the throw I work things. things can those and being we're -- an feel I environment, July just I'd quarter. where to now, be we could you keep into given always yes, election But progressing. all good quarter, beyond just factors. We've and is the again, COVID performance feel where when But look on -- about into September, next that social

in Stacy, If follow-up typically the I quarter tracked couple think may don't have alluded of you here September last you you is sorry, know early one in to to But or what business QX? QX the -- I relative how months could fiscal just about I this. in slip saw talk trends. of

like this talk mean in don't appropriate. and I to first about better. look you're it's think lot will But in a Brian. these environment. I really do think talking But we away of I having the this from environment, get I Well, trends. Yes. hope all, are environment That about things right,

trends July of there. continue, out September is and there's month-to-date, August still great, seeing headwinds And we're so which the considering yes,

it. great So, we feel about

question Montani from next from go ahead. Michael Evercore. comes Our Please

the update on follow-up the to wanted process I appraisals. remote just further. parts And guess a on to kind was question. three an bit little digital One on of I

and capability the just you it. future share there upgrades then If set to can

Secondly transactions were mentioned, think, out past, of X on the delivery. I multichannel -- Bill, XX in was you've home

So I could just you it us the sounded multichannel. that's if wanted to on how And thing update XX% of last transactions, see were like was trending? then

markets getting in the So that have to, was some just been markets, recently? mature of obviously, compare how percentage that would capabilities the more curious about the just more

Michael. Okay,

an it to to option my first your car through a in of said home, an remote opening customer remarks, you the going bring either absolutely appraisals, we get if I estimate on give hub, like trying all, or our appraisal. and to buy you're So

some tests and -- look are to instant that. with We expand cash now we've markets going on in right got offers

more be near in the on there'll future. So that

does actually far I in the alternative would that then talked We delivery, CECs, they are the the first As I to are the and spiked in is XX% And into kind how Doesn't of that prefer to quarter, delivery, I think, as up XX XX%, talked still it's store. they're Look, as far that that mean online That's past of again, And as progressing continues home necessarily of way out the number come you. under little pickup online, first the under XX%. up remember the and customers, thing? ended we even And saw think the below we're all XX% quarter. of -- on that X the I've gave quarter. during end And that it, really it that alternative XX% about most And home they you it CEC. grow. XX% the the delivery. the I say still customers That a at first both XX% our north markets, it's of curbside compare engaging I about combined. of XX%. quarter, the if around that progression. delivery with again, after the bit doing was to though the And the older

even growth seen we've a So there.

just But customers as that it more see number finished future up would that experience. progression want fact expect to customers a go go is to personalized we I Now to the in out. of the up, I the some expect of rolling see like that would continue

comes from question JPMorgan. from next Please ahead. go Gupta Rajat Our

should expense be or the had the degree second Just forward? going during SG&A a what the you couple And up you Could how expansion might here the about side, follow-up. in half marketing on a year. the there? see quantify -- sense second I give normalized us the a per And talked about unit the we think fiscal of have of going we expense expense should

to Yes. SG&A. I way in those comps to we've context it be is said overall past, And We said think of We've Yes, going in of to the you're reinvest year. hey, up about up X% half to X% efficiencies it's take absolutely right. in think the in But second back that the the I into will the SG&A. business. expect picked going to look, leverage. the some

So still basis even with we can dramatically, on what lever to would in expect advertising comps. about Keep the an the that given in step-up, dramatically about X% is, step-up, I in the context mind, of SG&A. Even the it to more annual swing. at worry less any cost per quarter with and X% this car

just couple to actions operational are and staffing on those investment pandemic, we said, and our structural business as improving, took focused, during We're that. do back mode. in But in mentioned that forward. the cost we expect That moving some we make of changes operations being dollars. yield and -- lot With brought did in we've add savings structure. we've times to efficiency I'll will And With spend a a lower of and we also CECs. strong our rapid growth

at I be aligned investments partially are reallocated to higher we're our at plan. those that look growth targeting that our and ROI So least with strategic savings to

our used same growth. the leverage X% help So comp And way mentioned, savings with we've past. X% is as the it be in will that to to that think fund communicated the about to Bill

across not we the I it's I think, -- CEC. store Yes. say, efficiency efficiencies, board. it's have have we only only savings, And not mean I would

logistics, sold reinvestments, wholesales. goods of improvements SG&A I cost think in reinvestments. it's of savings, And provide about whether in kind improvements opportunities, I SG&A of think also those all

or not areas. just two So one it's

I think business. it's across the

SG&A, Got item. on housekeeping of it. just And the more a

to I million, about if we tracking there $XX reductions still below had is any to of costs were levels, some permanent mean that curious well be overhead going to there Just Or other as there? the that normalized forward? The there think quarter? should how catch-up seems be here next in

Yes.

of that I about specifically the as reduced spend, reduced relocation favorability as is think roughly given that we way the But spend. undertook certain spending limitations pre-open half spend year-over-year well we think contractor to our to efforts environment. the cost-cutting

so And cutting efforts. are those cost

I what last year litigation is year last half mentioned this about higher my remarks, versus loss prepared and in was year. other self-insured The

a So half, again, other cutting, would more half as onetime. cost kind the of I view

Understood.

Sorry, to drops Or -- Just curious comment as when that X% is wrap is comment to now next something that just curious lower? that months the or just lower that be XX X% you that down that for that I'm we like like to how XX a about up, you the dropping made, expect months? should XX like thinking should a forward level? is here? to rolling to still leverage

as forward. an think moving that quarter-to-quarter, that quarter. Again, number Yes. happen there's of can within so much annualized I from would a

again, forward, months the at viewing how that, view business. least would I we're the XX is So moving next

And other the to year, have this we mode. I we're calls, pay were in investing that. to in point, is, And are some Enrique's obviously, other that have one take our would things of focused that the business. omni less this we if would in that. But that there would and in were guidance, than on would will benefits been It we Yes. then of you said less thing parts previous to investment do are I tell all X% X% --

will improvements example, line cost line top the for Company. sold. of drive and per not in will may drive benefits But on improvement in a bottom retail wholesale it car So leverage the be necessarily wholesale, which

important So this as whole well. remember to discussion I thing think in another that's

ahead. Nelson Our go from next Rick question from Stephens. Please comes

expectation A we forward. look rate curious norms, quick provision, an loss as If historical below push that represent CAF. X.X% Last rate for Tom, I talked you related million, quarter, $XX of X.X%. originated. expected receivables of question about quarter's X% this to at to was Charge-off about the

Yes. Okay.

million start a can color million around factors. tempered say the -- One, range. materially I provision. And strong the loss that of just has arising a performance little we you for additional loss was we the of expected the saw quarter. $XX million that by landed about $XX.X me provision. had adjustment on in will favorable reserve give then And do the supported development our talk that year, And the At last couple then about impact where of loss we $XX more I'll economic talked $XX adjustment approximately Let we the versus -- performance But and provision. economic originations in reflects we the income from with we things. lower loss of actually factor million

some had what X.X% target reserve. my the regard as to economy overall the and than release And the remarks, reflects of loss at some obviously, we do saw can't merited prepared we allowance in of we uncertainty end QX, while So booked performance substantially of better with behavior. is. range, in the said we facing I to the significant about the between But that's portfolio still of about recent if that last consumer our and out one improving what We're anything finance. spread deal, our funds, it's a the our seen performance. pretty cost had there, look pretty mean, at memory. -- highest ability you of and APR we've is capital what But markets confident I

spread the to a return bit little good make you allows even on loss environment, still business. that in So higher a

at than for period range, rather higher given all those return profit X.X% right comfortable of a We the that time, on investment money little riding the factors. X% So it's a to the to everything than now. we believe out. falling bit else worth giving is looked we're to where And someone get the

I haven't since That's okay. think spread you, Got we targets Any helpful. X% as XXXX. seen this forward? quarter Then that push

we But rates a And are. quarter, make to we market obviously, not them. And if aggressive angering where about customers, gets finance in competition the the when lender, good drop during allows sure The we we'll that down. expansion little our we demands It's less they we're preserve really coming business, now, we bit of go-forward from a are and a hard costs competitive. And that what We're right is a the didn't preserve to the funding at offers that CAF. we're those any we'll and I goal APRs. charge we to as act look see competition on anybody If margins, to us going need market at -- And as result feel then say. basis. to this about X% we margin see look quarter the our say, always accordingly. saw

Please from [Operator Morningstar. David Instructions] Our ahead. next from go question Whiston comes

the on and despite used to flat relatively as unit, dollar profit -- you gross how went But Were they self-sufficient auction XX down. quarter? because were able just per bps ASPs higher in despite Question margins ASPs prices? were more down was up your go

Yes.

a question. it's So great

mix that percentage So the The older we primarily down. vehicles. of of shift cited sold went went that higher I ASPs because where is down a they reason earlier

So down. fairly flat. it was that takes price Acquisition

driver the lot that a bought expensive. there more that bit But we the a little necessarily during quarter is that of sold there's main think is of age. what inventory see mix hasn't I the shift in you

fair that probably long-term better? Okay. that's a you're they can is to then then going be not it going get if trend, to And especially assume

The mix shift selling going or down? just the average price

The mix?

out I there beauty whatever look, the business customers is, mean, our have mix, we'll are the The of demanding.

then to cars, sure them expensive less or out put there. old want we make customers the going if So we're

So that's all by driven customer demand.

next Michael Our go from Montani comes Evercore. ahead. Please from question

side. the two was credit Just around things. One had

rates, you can around programs government roll impact and also deferral. that then Just incremental forbearance, of share there's the color any all curious if perhaps

of how kind quick -- overall, that is it So about CAF? And then follow-up. you're feeling what's a just

reasons of we in as believe within we good from the quarter to quality side, actually Sure. Yes. we couple the quarter. QX, a we think, perspective, felt in First, perspective To the A Important had you a favorable. QX, a note remember, from from losses quarter. were we were that improved loss of speak I to like is: from CAF unfavorable where the might loss really

we So there. was swap on going some believe that there's

customers, to And less beyond within our of pay their predominantly them deferrals. the that But them typical in bills. helped payment And were loss, their throughout for payment provide in to the job that, certainly practices. higher in also, to to to and money. spend You the quarter good deferrals money certainly we customers, there. frankly, our stimulus We on that, avoided just the places reverted federal Payment we did relief able allowed our delinquency. And also, customers. also put Certainly, know to quarter a then pockets lower earlier relief back provided was were we to there the -- some that's quarter. talk about

But that forward, now. going good take customers, roll basis, From quarter, real So uncertainty that quarter for in as the happy with we out are felt our and good from probably obviously, loss rates losses we a uncertainty a is say speculative. to what's far right as reserve. going there. we But where hard were think we're numbers on reflected go-forward lot the as all-in-all, But concerned helped well, able to reserve to sit of happen, care our a a the that perspective, perspective. of

Great.

competitors you what set? year the that all do summer, mid- But of to see we've into the of are high I've smaller that's Cox So because bit market helpful we as kind the back call then showing might really is this the other that who seen And from data concerned guess some that that single-digit well? I know like the color. before And the to folks just today some growing over other gauge contracted I'm is about rate. to of using industry curious would I'm around be you unfolding half there's How and be multichannel had capability getting during faster. the share. main as question a a think

Yes.

look, sales, our of of quarter experience. whole factors occupancy through, to only our are i.e., we only that the I could having look, And have there. to had models the little stores. the think, the disproportionately I stores first that how And curbside given operating at just is end goal to it's obviously, through, appointment of out share we I run what increase volume share were But about better that that basis. -- regardless restrictions So that pickup. the an beginning talked the customer work the market the annual day, macro on only the had We or omni, we through in we impacted, are bit to this market work about talk deliver think of think a

mean, the XX%, being mean them earnings. this half with CEC in occupancy bulk very done So go negative XX%. talk again quarter really Again, work continue have inventory. to the progress the am with the in less forward. team. quarter CEC hard. a of I job and restriction, to to and you've occupancy comp I the an you you our proud about I Also that mature about even to gets I stores the than And have comps able quarter. of having record it still fact are that, of through starting how and we're think XX-plus that phenomenal I that working And following we'll done one obviously, can't from light get restrictions, of the within the stores at although still

again, good us we about And for feel this where are. and I continue share. just I So to springboard think a to is grow sales market

from Our next Exane question go comes BNP Paribas. ahead. from Chris Bottiglieri Please

product but the the I I a have I goes the wanted cadence this is new of trend. the bit us should about kind long And a opening below just opening store, just this we how little Then directly, will follow-up. that is XXXX? more openings plan more store beyond guess time what's I environment, could remind ask expect to line, what store environment. just maybe takes? Or into of it's would it's probably a XXXX. for imagine

ramp But plan year we more XX of going We've are We this factor XX think up start The should this years. construction number open you to was time. ramping, way been is think I several is timing were to takes to more this where of it Chris, XX given opening stores to just Yes. up a else. year. reflective the about anything just open it's for XX. that what than up and

So that. this at into I read point, wouldn't,

thumb Okay. That's now, -- mean, us the not you opening for you think right but something store, preopening other of good store helpful. stores for no else us what's Obviously, the it how remind through overhead of obviously, it's to And that can then openings you remind But that? just stores quarters. you're to number I works? open, you just per preopening, unless can next of a you do give but impact benefit can expense what depending rule us on the several

a months a that preopening cost time million, in three would those to roll costs on $X.X spread a material good say over rolling four I in $X store be out million, way. period. Yes, opens will average to going will about And but start before that is again

will session. closing question-and-answer over now our the to concludes Nash And I This turn call back Bill remarks. for

your Thank today your you, thanks Carol. the questions and support. Well, and joining listen, call for for

again She's wishes best are to merge And definitely market are about to and world-class a that our with to model, We a years need long we'll within out in her. reason for come. thank and continue diversified our They of to shout knows just earnings that experience, been a experience car world-class give finally, got our know. along I've CarMax I gains with disruptive online all for remain our to seamlessly our Celeste in-person force anybody share confident I better the well here we to business than many used ability the time, as industry. associates.

missed, but So she will well. wish her I absolutely be

next your you quarter. talk thank time for So and today, again, will we again

Ladies may and participating, disconnect. gentlemen, you Thank now for today's this more and concludes conference once call. you