CarMax shares fall 6% despite strong Q1 earnings due to margin pressure and credit concerns

CarMax reported better-than-expected Q1 earnings with adjusted EPS of $1.31 and revenue of $8.01 billion, surpassing estimates. However, shares dropped over 6% as investors focused on declining retail vehicle profitability and margin compression from pricing strategies. Concerns also arose over credit risks in CarMax Auto Finance, including rising loan delinquencies and exposure to lower-tier borrowers. New CEO Keith Barr highlighted a strategic plan to boost unit sales and earnings growth while improving shareholder returns.