Company: KMX
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001170010-25-000024
Chunk: 60

Company: CARMAX INC
Filing Date: 2025-04-11
Form: 10-K
Item: Item 7
Chunk 60
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.  Of the approximately 223,000 vehicles purchased from consumers, more than half were purchased through our online instant appraisal experience.  

While SG&A as a percent of gross profit can fluctuate from quarter to quarter depending on variability in gross profit and the timing of SG&A spending, our initial goal on the path to strengthening our SG&A to gross profit leverage over time is to achieve a rate in the mid-70% range on an annual basis.  Achieving this annual rate will require continued efficiency gains in our operating model, gross profit growth and healthier consumer demand.  In fiscal 2026, we expect to require low-single-digit gross profit growth to lever SG&A.  This will be supported by our goal of becoming omni cost neutral for the first time for the full year of fiscal 2026.  Omni-channel costs include commissions and the cost of operating our CECs.  We expect our omni-channel costs per used unit, per total unit and as a percentage of gross profit for the full year of fiscal 2026 to be more efficient than before our omni-channel roll-out.  This reinforces our pathway back to a lower SG&A leverage ratio, as noted above.

We have positioned the company to achieve gains in retail and wholesale unit sales and market share, with double-digit EPS growth for years to come.  Our earnings model is designed to deliver an earnings per share compound annual growth rate (“CAGR”) in the high teens when used unit growth is in the mid-single digits.  This earnings growth will be driven primarily by used and wholesale unit growth, strength in other gross profit, CAF’s credit spectrum expansion, continued operational efficiencies, ongoing SG&A leverage and our share repurchase program.  

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Regarding our long-term goals, we are focused on growing the business and we continue to make progress toward our long-term goals; however, we are removing the timeframes associated with them given the potential impact of broader macroeconomic factors.

In calendar 2024, we estimate we sold approximately 3.7% of the age 0- to 10-year old vehicles sold on a nationwide basis, consistent with calendar 2023.  External title data indicates that while our year-over-year market share came under pressure during the first half of the year, it recovered as we achieved accelerating gains through the second half of the year, with particular strength in vehicles aged 0 to 4 years, which grew for the entire year.  The data indicates that our market share continued to grow year-over-year