CarMax Inc. (NYSE:KMX) Q4 2020 Earnings Conference Call - Final Transcript

Apr 02, 2020 • 09:00 am ET

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CarMax Inc. (NYSE:KMX) Q4 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question today comes from Scot Ciccarelli from RBC Capital Markets. Please go ahead.

Analyst
Scot Ciccarelli

Good morning, guys. Hope everyone is doing well down there in Richmond and healthy at this point. Bill, I think everyone pretty much understands that the world changed pretty significantly in early March. And of course, you're dealing with half your stores being closed, on top of what I would think is a pretty broad consumer paralysis for big ticket purchases. So that being said, I was hoping you might be able to provide a little bit more color, quantification on what you've seen over the last few weeks, as I think that context would probably be helpful for investors. Thanks.

Executive
Bill Nash

Sure. Thank you, Scot, for the question. Yeah, let me give you a little color first off on the store closures. So, like I mentioned, about half are closed or in limited operations currently. And I say currently because it changes by the hour. It's a very fluid situation. We have approximately 70 closed -- 70 stores that are completely closed. We have another approximately 25 or so that are modified operations. And so, when you think about that, think about modified operations as primarily it's appointment only. So the consumer can't just show up at the location. All of the rest of the locations are all impacted by this because of social distancing guidelines, which are set by each locality. So for example, in some stores, you can't have more than 10 customers in the showroom at any point in time.

As far as adding a little bit more color on the sales, all of the open stores are substantially off on sales year-over-year over the last two weeks. Most of the stores that have been open during that time, so for the last two weeks, are selling 50% or less than 50% of what they sold last year. Now, I don't think that should be a surprise to anyone because I think during that time period, pretty much 70% to 80% of the US has been told to stay at home. So given that, consumer demand has been progressively going down. Hopefully, that color adds a little bit.

Analyst
Scot Ciccarelli

Yeah, that's really helpful. And can you just clarify something that you brought up on the GPUs, the gross profit per unit pressure comments? Are we talking like a couple hundred dollars, but you're still making a positive spread? Or is this more like selling cost or even below cost because you just need to liquidate inventory and generate cash? Thanks.

Executive
Bill Nash

Yeah, Scott, it's really kind of too early because we're really talking about the last two weeks. If I go back to the Great Recession, I think during that period, we had a couple hundred dollars. This albeit is very different and it's kind of unprecedented. So at this point, it's really hard to tell you other than I'm sure we'll come under some pressure.

Analyst
Scot Ciccarelli

Got it. Thanks a lot, guys. Good