With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

This year's 100 Best Companies to Work For are rebuilding the social contract at work so people feel supported, trusted, and future-ready as they undergo that transition.

100 Best Places to Work 2026_CarMax

Employees say:"I love working for CarMax and I will retire with CarMax. CarMax truly cares about the individual, whether customer, associate or community. CarMax is more than a place to work and make money, it completely changed my life. I feel like my personal values align with the CarMax core values and CarMax truly embraces each associate for their own authentic self. I have grown my career from an hourly associate to a Senior Manager and I have felt so much support. I have built financial success in my life through CarMax valuing me as an individual, having honest conversations on where I can improve as well as recognizing me for the strengths I bring to the table. CarMax is the best place to work!"

Fortune 100 Best Companies to Work For

See which workplaces made this year's list.

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Employees say:"CarMax truly cares about innovation and allows employees the opportunity to present ideas and solutions as well as the time to prove out those ideas. Everyday I see people coming together to improve and develop new solutions that make this a great place to work for associates, and provide a better shopping experience for our customers."

Best Large Workplaces in Retail

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The top companies on our list have one thing in common: Staff largely trust leadership to see them as well-rounded people and reward them for a job well done.

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Employees say: "CarMax is very much driven to create a welcoming and associate-first culture. I am confident that company leadership wants to create a company and business model that is ethical and respects customers and employees, instead of chasing short-term profitability."

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

2025 Best Large Workplaces for Parents_CarMax_US1__68b9ad8e7757c3af0ca2bb8e_1

Employees say:"CarMax is, hands down, the best place I have worked in my long career. I truly feel valued here, and I believe my work makes a difference. My colleagues and managers are smart, competent, kind, and enjoyable to work with. Twice a year, we provide company feedback via a survey, and the company has made meaningful changes based on that feedback."

Best Large Workplaces for Parents

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Employees say:"CarMax is very much driven to create a welcoming and associate-first culture. I am confident that company leadership wants to create a company and business model that is ethical and respects customers and employees, instead of chasing short term profitability."

Industries included in the sector are automotive retail, general merchandisers, internet retail, and specialty retail.

Fortune Sector Leaders: Retailing

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

Creating a more empathetic workplace looks like staying loyal to workers, emphasizing D&I initiatives, and paying well.

100 Best Companies 2024-CarMax

This is the 20th year that CarMax, a used autos retailer, has appeared on the list.&nbsp;The company has started using AI to support business processes and consumer-facing content, such as car reviews, to help free up employees' time. In addition, CarMax is using AI to power multiple customer experiences, such as giving online offers to customers to sell their car to CarMax in minutes, and providing personalized car recommendations to help customers buy their next car from CarMax quickly. CarMax also invests in its virtual AI assistant, Skye, to help streamline its customer experience centers and support customers as they are shopping, through steps like vehicle shipping and appointment preparation and management. &nbsp;For CarMax, community involvement is big. One of its longest-lasting key relationships is with <a href="https://kaboom.org/">KABOOM!</a>, an accredited charity that builds playgrounds in underfunded and underinvested communities. Since the partnership formed in 2011, more than 11,000 employees have come together to build 206 play spaces.

The 200 companies on this list are transforming industries from the inside out.

Building a culture of trust and transparency is essential to help everyone thrive, especially in rocky economic times.

100 BEST COMPANIES 2023-CarMax

The no-haggle retailer of used autos is appearing on the Best Companies to Work For list for the 19th time this year. 
<ul> 
 	<li>New hires receive a warm welcome even before their first day. As soon as someone accepts a job offer, the team leader calls to welcome them, and a mentor calls to answer any questions they might have before they start.</li> 
 	<li>Elaborate onboarding includes making sure new hires have clear direction about their schedule and are provided with smaller details, such as where they should park and what restaurants are nearby, before their first day.</li> 
 	<li>Workers can utilize the CarMax Connect web platform to get personalized information, aggregated news, and useful company resources.</li> 
 	<li>“It's the first company that I've worked for that makes you feel the company puts its employees first, and truly understands that it's the sum of its parts that make up the whole,” said one employee. “They're also very understanding when it comes to personal issues getting in the way of work and allowing you to take time off to address them, and not make you feel like you're letting the whole company down for doing so.”</li> 
</ul>

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

Fortune Global 500

GPTW 2023 Best Workplaces Retail Large CarMax_6

Employees say: 
 
"I truly feel I am an equal employee. This is the first place that I have worked at where all of management makes you feel equal to them. There are no favorites here, which makes it a very relaxed, amazing place to work."

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

When it comes to supporting employees, flexibility, diversity, and a few extra paid days off go a long way.

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CarMax, the nation’s leading used-car retailer, believes that good customer service begins with treating employees right. At the peak of the pandemic, every CarMax manager met with their associates to help them balance work and family life. As a result, some employees were able to modify their schedules or take a leave of absence that enabled them to continue receiving benefits. And CarMax aims to hold itself to a high standard; associates with concerns over safety or ethics are encouraged to speak up via an open door policy. “The most amazing thing about working here is our managers genuinely care about us,” says one employee. “They will put in extra time and effort to help us with anything we need, even if it’s something in our personal life.”

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

Great Places to Work in Retail Large- 2022-CarMax_1000333-1

Employees say: 
 
“I feel that everyone here is welcoming and accepting of everyone. We are encouraged to develop relationships within our department as well as others. We are empowered to make decisions we feel are necessary in the moment whether it is business or customer related. I can be myself at work and that is a great feeling. I feel people have the best interests of everyone on a personal as well as professional level.”

This year’s Fortune 500 marks the 68th running of the list.

Our 2021 list of the 100 best companies to work for, as ranked by their employees. See which companies made the list.

100-best-companies-2021-37-Carmax

When closures led to furloughs of some employees, it wasn’t just hourly workers who felt the squeeze. “I appreciated that executives took a pay cut and that the board of trustees did not receive any compensation,” one employee writes. (Indeed, CEO William Nash took a 50% cut.) The company covered health insurance premiums for furloughed workers, and an associate disaster relief fund enabled employees to apply for help if they became ill or experienced a qualifying hardship. By the end of July 2020, CarMax no longer had any associates on furlough, and positions had been made available for approximately 99% of impacted employees.

See which retailers made this year's list.

Best-Workplaces-Retail-2021-CarMax

Employees say: 
 
“The culture at CarMax is by far the best out of all the companies I have worked for. I truly feel CarMax appreciates their associates and will go above and beyond to demonstrate that to them. I am proud to say CarMax when people ask where I work!”

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-136-CarMax

As the largest used car retailer in the United States, CarMax generates revenue from both the retail business and its wholesale auction house.

Our 2020 list of the 100 best companies as ranked by their employees. See which companies made the list.

Best-Workplaces-Retail-2020-CarMax

Employees say: 
 
"Carmax is the first company I've worked for that 'walks the walk.' Being a female in a male-dominated industry was difficult, but here I'm treated as an equal, and have had the opportunity to learn in stretch roles, and am now managing my own store!"

This year's Fortune 500 marks the 66th running of the list.

F500-2020-173-CarMax

Founded in 1993, the auto retailer buys and sells used vehicles in its more than 200 store locations across the U.S.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

World's Most Admired Companies

Our 2019 list of the 100 best companies as ranked by their employees. See which companies made the list.

From groceries to apparel to home decor, see which companies made the list.

CarMax-Best Workplaces in Retail 2019

Employees say: 
“I believe the people that are hired here are not just hired by credentials, but also integrity, which plays a big part in creating the Carmax atmosphere. There is plenty of room for growth and opportunity for many people.”

This year's Fortune 500 marks the 65th running of the list.

We surveyed tens of thousands of young employees to create this list of millennials’ favorite workplaces.

Carmax-best workplaces millennials 2019

Employees say: 
“At CarMax everyone cares for each other and is there for each other. We make friends and have a wonderful time at work. We share and help each other through any situation work related or not.”

100 Best Large Workplaces for Millennials

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

Our 2018 list of the 100 best companies as ranked by their employees. See which companies made the list.

This year's Fortune 500 marks the 64th running of the list.

best-workplaces-millennials-2018-CarMax

Employees say: 
 
&nbsp; 
 
"CarMax really focuses on building skill levels vs. driving numbers. We all know that numbers are the bottom line, but here they focus more on behavior. From my sales experience, if you have the behaviors, and they're strong, the numbers always come." 
 
&nbsp; 
 
"I was hired as a detailer, I couldn't even drive as stick shift. An entry level mechanic position opened and I was afforded the opportunity. I went on to become a master mechanic. After 8 years with the company, I've just accepted an offer for an analyst position at home office. The room for advancement is incredible." 
 
&nbsp;

Our 2017 list of the 100 best companies as ranked by their employees. See which companies made the list.

This year's Fortune 500 marks the 63rd running of the list.

best workplaces for millennials 2017 CarMax

Employees say: 
 
&nbsp; 
 
"Although I perform the same business functions every day, no two days are the same at CarMax. The employees are a diverse group of people, which makes it especially enjoyable to work here. I have worked at CarMax for over 5 years and plan on working here for many more years to come!" 
 
&nbsp; 
 
"[The company] will not only teach you what you need to or want to know, but will also give you the opportunity to advance yourself by helping pay for schooling. CarMax teaches you a lot about yourself as a person by helping you work on your skills ... They inspire me to be a better person every day." 
 
&nbsp;

Google/Alphabet is the No. 1 place to work for the seventh time in 10 years. Six newcomers include Veterans United at No. 30, Hilton Hotels at No. 56, and Slalom Consulting at No. 100. IKEA’s U.S. arm returns to the list, along with GoDaddy and Sheetz.

This year's Fortune 500 marks the 62nd running of the list.

The second annual ranking of the best employers for workers 35 and under.

best workplaces for millennials 2016- CarMax

"I always enjoy the camaraderie and family feel. CarMax allows me to grow knowing mistakes will happen, making the environment a positive one to work in. The exposure and trainings I have received have given me valuable skill sets that will stick with me for the rest of my life. I also feel that I am a person and not a number!" says one millennial worker. 
 
&nbsp; 
 
"Management really cares about employee development. My manager works closely to help me improve in preparation for a promotion. I am also encouraged to focus on projects and types of work that interest me," explains another millennial. 
 
&nbsp; 
 
Read the .

This year’s list marks Fortune's 18th year of partnering with Great Place to Work. Google ranks No.1 for the sixth time, and 16 new companies make impressive debuts, including Acuity (No. 3), Twitter (No. 24), and Riot Games (No. 13).

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Google tops the list once again, marking its eighth appearance and fifth time as No. 1.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Best Workplaces For Parents

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Best Workplaces In Retail

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CarMax started as a solution for consumers who dreaded a trip to the car dealer. Emphasizing a stress-free experience, it introduced the concept of “no-haggle” purchasing through slogans like “You shouldn’t have to argue to get a fair price.” Now CarMax is the largest U.S. retailer for used cars with 250 stores nationwide and a portfolio of assets worth nearly $18 billion. In its fiscal year ended February 2025, the company sold roughly 790,000 pre-owned vehicles and another 540,000 wholesale vehicles at auctions.

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Q3 2025

CarMax (KMX): Company Profile, Stock Price, News, Rankings

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CarMax

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Ladies and gentlemen, thank you for standing by. Welcome to the third quarter, fiscal year 2026, CarMax Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Lowenstein, Vice President, Investor Relations. Please go ahead.

Thank you, Nikki. Good morning, everyone. Thank you for joining our fiscal 2026 third quarter earnings conference call. I'm here today with Tom Folliard, Interim Executive Chair of the Board, David McCreight, Interim President and CEO, Enrique Mayor-Mora, Executive Vice President and CFO, and Jon Daniels, Executive Vice President, CarMax Auto Finance. Let me remind you, our statements today that are not statements of historical fact, including, but not limited to, statements regarding the company's future business plans, prospects, and financial performance, are forward-looking statements we make pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our current knowledge, expectations, and assumptions, and are subject to substantial risks and uncertainties that could cause actual results to differ materially from our expectations. In providing projections and other forward-looking statements, we disclaim any intent or obligation to update them.

For additional information on important factors and risks that could affect these expectations, please see our Form 8-K filed with the SEC this morning, our annual report on Form 10-K for fiscal year 2025, and our quarterly reports on Form 10-Q previously filed with the SEC. Please note, in addition to our earnings release, we have also prepared a quarterly investor presentation, and both documents are available on the investor relations section of our website. Should you have any follow-up questions after the call, please feel free to contact our investor relations department at 804-747-0422, extension 7865. Lastly, let me thank you in advance for asking only one question and getting back in the queue for more follow-ups. Tom?

Thank you, David, and good morning, everyone. Thanks for joining us. Today, I'm going to provide some perspective on our leadership changes and CEO search. I'll then turn the call over to David, who will review our initial observations and the actions we are taking in response. After that, Enrique and Jon will speak to our third quarter results before we open the line for your questions. As many of you know, I've been part of CarMax for more than 30 years. Over that time, we've developed a beloved brand with national scale, unmatched physical and digital infrastructure, and an award-winning culture. However, recent results have been unacceptable and do not reflect the company's potential.

As a result, even though the board was already working on a succession plan, we determined that more immediate change was required and that direct involvement from David and myself was the best approach to strengthen the business in the near term. The board has been searching for a permanent CEO with urgency. We are seeking a proven leader who can drive sales, maximize the benefits of our omnichannel experience, strengthen our brand, improve operations, and champion our culture. Conversations are underway, and we have some promising candidates. What is most important is that the next CEO captures the tremendous opportunity that we have in front of us. As Interim Executive Chair of the Board, I'm focused on supporting David and the leadership team. David is in Richmond five days a week, and I'm spending a significant amount of time here myself.

We are operating with a renewed sense of urgency to drive the business forward. I want to thank David for stepping into the Interim President and CEO role. As you know, he has served on our board since 2018. David has more than 20 years of executive leadership experience at prominent retail brands in highly competitive and fast-paced markets. He has led several successful brand transformations, new Omnichannel strategies, and growth initiatives for digitally native brands. What made him a great addition to our board has also been a tremendous asset in this transition. And before I turn it over to David, I also want to thank Bill Nash for his more than 30 years of service with CarMax. David?

Thanks, Tom, and good morning, everyone. I'm honored to serve as the Interim President and CEO at this important juncture in CarMax's history, while our top priority is to find a terrific next leader. In the interim, Tom and I are committed to lead and take the steps needed to set up the next CEO for success. After three decades in the retail industry and having led multiple companies through turnarounds, I am familiar with the rigor and critical thinking required to succeed. The good news is CarMax already possesses many of the vital attributes needed to turn the business and regain momentum for growth, including a well-known and trusted brand, a strong culture supported by a base of 28,000 talented associates, and an expansive digital and physical infrastructure, including over 250 premium locations that put us near 85% of the U.S. population.

Despite these advantages and after decades of industry leadership, based on recent results, it is clear CarMax needs change, and while it has been only a few weeks in our interim roles, here are some of our observations. Prices. Our average selling prices have drifted upward and appear to be less attractive to customers. To ensure that CarMax is a preferred choice, we will work to shrink the gap between our offering and the marketplace. We are lowering margins and supporting this action with marketing spend while also building out more effective ways to communicate our value to the consumer. We are also comprehensively reviewing all the costs associated with bringing a car to market. We're going to find ways to eliminate the unproductive while maintaining our reputation for having a high-quality fleet. Around the consumer, we need to bring an even sharper focus on the customer throughout the organization.

In guiding decisions, we will reawaken our intellectual curiosity and challenge long-held institutional beliefs as we work to discover the most important elements to the customer in closing the sale. We will emphasize customer-insighted decision-making rooted in fact-based consumer research. Digital. We have the opportunity to incorporate a clearer and more effective selling voice in our digital experience. While we have spent several years building out capabilities for customers to shop how they want and where they want, we must now focus our energies on making the digital shopping experience easier and shift our digital voice from one that earnestly delivers abundant information to one that focuses on delivering sales. This will drive conversion and further improve customer satisfaction, just as we do so successfully in our stores. SG&A.

Similar to our approach in tackling the cost of bringing our cars to market, we believe our expense structure is too high. It is clear that we have the opportunity to leverage our technological platforms and process enhancements to reduce our spend. We are committed to sharpening our business model and eliminating unproductive costs. And in just a moment, Enrique will provide a progress update on the decisive actions we are taking to reduce at least $150 million in SG&A. Profitability. We will more aggressively tap into opportunities in the selling experience to enhance our profitability. We are excited about the outstanding growth potential we have across CAF and our ancillary products. You will hear more from Jon today about our progress in full spectrum lending, as well as the steps we are taking to capture incremental flow-through in our extended protection plan business. Culture.

We've always been a company intensely focused on operations. But with the advent of disruptive technologies, we now need to reignite the entrepreneurial spirit that made CarMax the industry leader for decades. Simply put, we will move faster and operate leaner while taking smart risks. We are optimistic that our immediate pricing and marketing actions will improve our sales performance, but pressure earnings in the near term. As we consider the business model more holistically moving forward, we anticipate that earnings pressure will be offset by unit growth, expanded profitability in CAF and ancillary products, and through reductions in SG&A and COGS. Tom, the board, and I believe that CarMax has many of the requisite attributes for a successful turnaround. We are confident the actions we're taking will begin to strengthen performance while the board identifies the right permanent CEO to lead CarMax for the future.

Now I'd like to turn the call over to Enrique to discuss our third quarter financial performance in more detail. Enrique?

Thank you, David. During the quarter, we delivered total sales of $5.8 billion, down 6.9% compared to last year, reflecting lower volume. In our retail business, total unit sales declined 8%, and used unit comps were down 9%. Poor performance across our age zero to five inventory was partially offset by increased sales of older, higher-mileage vehicles, which represented over 40% of our sales for the quarter, an increase of approximately five percentage points compared to the second quarter and last year's third quarter. Average selling price was $26,400, a year-over-year increase of $230 per unit. The increase was due to higher acquisition costs driven by year-over-year increase in market prices, partially offset by the increase toward older, higher-mileage vehicles. Wholesale unit sales were down 6.2% versus the third quarter last year. Average wholesale selling price declined by $40 per unit to $8,100.

We bought approximately 238,000 vehicles during the quarter, down 12% from last year. We purchased approximately 208,000 vehicles from our consumers, with more than half of those buys coming through our online instant appraisal experience. With the support of our Edmunds sales team, we sourced the remaining approximately 30,000 vehicles through dealers, which is down 9% from last year. Third quarter net earnings per diluted share was $0.43 versus $0.81 a year ago. This quarter was impacted by $0.08 of restructuring expenses related primarily to our CEO change and the workforce reductions in our customer experience centers. Total gross profit was $590 million, down 13% from last year's third quarter. Used retail margin of $379 million decreased by 11%, driven by lower volume and profit per used unit of $2,235, in line with historical averages, though down approximately $70 per unit from last year's record high.

Wholesale vehicle margin of $115 million decreased by 17% from a year ago, with lower volume and wholesale gross profit per unit of $899, a decline of approximately $120 year-over-year. Both wholesale volume and margin were impacted by steep depreciation. Other gross profit was $96 million, down 16% from a year ago. This was driven primarily by the impact of lower retail unit volume on EPP. CarMax Auto Finance income was $175 million, up 9% over last year. Jon will provide detail on CAF's growth in a few moments. On the SG&A front, expenses for the third quarter were $581 million, up 1% from the prior year, driven by our previously communicated investment in marketing as we supported our new brand positioning launch and the restructuring expenses that I previously noted. These were partially offset by a reduction in the corporate bonus accrual.

As David noted, we are on track to achieve at least $150 million in exit rate savings by the end of fiscal year 2027. We took our first significant step toward these savings this quarter with an approximately 30% reduction in our CEC workforce. This reduction was supported by our continued process and technology enhancements, which are making our associates more efficient, as well as empowering our customers to perform more of their shopping activities themselves. Turning to capital allocation, during the third quarter, we continued our share repurchases, buying back 4.6 million shares for a total expenditure of $202 million. As of the end of the quarter, we had approximately $1.36 billion of our repurchase authorization remaining. Looking forward, I'll cover two items. We are optimistic the actions of lowering margins and increasing marketing will improve our sales performance trends, but may pressure near-term earnings.

We expect marketing spend on a total unit basis to be up year-over-year in the fourth quarter, though to a lesser degree than during the third quarter, with a focus on investing in acquisition to drive buys and sales. Secondly, we expect pressure on our service margins in the fourth quarter due to seasonal sales and as we annualize over cost coverage leverage taken last year. At this time, I will now turn the call over to Jon to provide more detail on CarMax Auto Finance and our continuing focus on full credit spectrum expansion. Jon.

Thanks, Enrique, and good morning, everyone. During the third quarter, CarMax Auto Finance originated $1.8 billion, resulting in sales penetration of 42.6% net of three-day payoffs versus 43.1% last year. Weighted average contract rate charged to new customers was 11% versus 11.2% last quarter as we continued to adjust consumer rates in reaction to the broader interest rate environment. Third-party tier two volume for which we collect a fee and tier three volume for which we pay a fee combined for 24.9% of sales versus 24.4% last year. Weakness in tier two application volume, along with the impact from CAF's expansion in the tier two space, was more than offset by growth from our tier three partners. CAF penetration continues to benefit from underwriting and pricing adjustments implemented since the beginning of the fiscal year, estimated to be 100 to 150 basis points in the quarter.

However, this volume has been offset primarily by lower application volume in the prime credit segment, along with the aforementioned tier three partner lender overperformance. CAF income for the quarter was $175 million, up $15 million from the same period last year. Included in the quarter is a $27 million gain on sale, along with an additional $5 million of servicing fees attributed to the closing of the 25B deal in September. Note that while the gain on sale is fully recognized at the time of sale, servicing fee income will continue over the remaining life of the deal and will be proportional to the receivable volume remaining. Net interest margin on the portfolio was flat year-over-year and down to 6.2% from 6.6% last quarter, and largely reflects the higher margin receivables removed from the balance sheet as a part of 25B.

CAF had a loan loss provision of $73 million, resulting in a total reserve balance of $475 million, or 2.87% of auto loans held for investment. Losses observed during the quarter were in line with our expectations, upon which we based our reserve at the end of Q2. With regard to growing the CAF business, I'm immensely proud of our accomplishments today. Over the last 18 months, we have greatly expanded our funding options, including this quarter's off-balance sheet transaction, which have been critical prerequisites to this growth. In addition, we continue to add underwriting capabilities and modeling refinements that will support profitable expansion. Separately, I am also excited about the significant future earnings potential from both our redesigned MaxCare plan, which focuses on mechanical coverage, and our new MaxCare Plus plan, which focuses on cosmetic protection.

These products have already migrated from test phase to pilot in multiple markets, and we expect to achieve near nationwide rollout during Q1 of FY27. Now I'd like to turn the call back over to David. David.

Thank you, Enrique. Thank you, Jon. Today, we outlined our initial observations and near-term priorities to drive improvement, shrinking the price gap between our offering in the marketplace with a stronger focus on customer experience, increasing digital monetization capabilities, reducing costs, enhancing profitable growth drivers, and improving the speed of decision-making. And while we are realistic about the near-term challenges, CarMax's competitive foundation remains strong. We have a trusted brand, national scale that is difficult to replicate, leading omnichannel capabilities and growing digital infrastructure, a strong financing platform in CAF, and an award-winning culture. Our execution has not matched the potential of these assets, but that's what's changing. Tom, the board, and I are focused on strengthening performance and creating a solid foundation for the permanent CEO to build upon. We appreciate your continued confidence in CarMax and are committed to being transparent about our progress.

With that, we'll open the line for questions. Operator.

Thank you. If you would like to ask a question, please press Star 1 on your keypad. To leave the queue at any time, press Star 2. Once again, that is Star and 1 to ask a question. And your first question comes from the line of Sharon Zackfia with William Blair. Your line is open. You may now ask your question.

Good morning. Good to hear you again, Tom, on a conference call, and welcome, David, to the world of CarMax conference calls.

Yeah. I guess maybe if you could give some color on the magnitude of the GPU reset that you're looking to see here in the February quarter. And then as you look at the business, kind of I guess with a fresher perspective, are there any customer cohorts that you can delve into where you think somehow CarMax has become a bit less competitive or a bit less attractive? And what's the game plan to win those customers back?

Yeah. Sharon, hey, it's Enrique. Let me jump in. The margin reductions, which are going to be supported with acquisition spend on marketing, will be meaningful in our design just to narrow the gap that we talked about with the broader marketplace. And we're optimistic that those can actually improve our retail sales trends into the quarter. But they're big enough for us to talk about. And we're going to see how they roll out. We're going to see the impact within this quarter. And then when we have our year-end call in April, we'll provide insight and an outlook on what those margin reductions and marketing spend increase mean to us.

Yeah. Sharon, this is Jon. I'll jump into your customer cohort question. Yeah, I think there's obviously places across the spectrum that we're looking to improve and grow sales. One in particular that stands out for me is if you look at maybe the higher FICO segments. We mentioned in the prepared remarks sort of in CAF and the tier two section that maybe 650-750 space feels like we've lost volume there. We can track that through application volume coming through the door and then progression further on. So a lot of speculation around what that could be. Certainly, we're going to look at all things. David mentioned a number of things, pricing. Obviously, we try and keep our rates competitive, just overall the offering that we provide the consumer.

but I think that's one spot in particular that I think there's a lot of chance to recapture and fuel our growth.

Can I ask a follow-up? You have a competitor who will be kind of lowering finance rates proactively in the current quarter to reinvest some of their GPU to the customer. I think historically you followed the market on finance rates. Would there be something you'd be willing to do on interest rates to kind of weaponize that a bit more to gain more conversion?

Sure. I appreciate that question. Yeah, I think we're always keeping the pulse on the markets, looking at how we compare to obviously credit unions and banks and what have you, and certainly competitors as well to the degree we can measure that. Yeah, I'm not going to speak to what they're going to do. But we think our APRs are quite competitive with the Fed making the moves that they've had to make. We will adjust accordingly. We always have a test and learn methodology there. I'm not going to say we're going to try and get further ahead of the market. But I still think in maybe this space, there is a gap in interest rates that still exists, although it might be closing. But I think it's the broader offering question.

How do we compare from an interest rate standpoint, certainly in maybe term, but obviously couple that with what's the price of the car and all the other fees associated with that? So I think the bigger offering picture is the one that's really going to be the focus here.

And Sharon, what I'd say, looking at it a bit more broadly as well, is that the reductions in SG&A, so these are levers that we've talked about, the reductions in SG&A, the focus on COGS, growth opportunities in CAF in full spectrum, as well as EPP products that Jon talked about and we're happy to elaborate on. Those are all levers that bring to bear an ability to be more competitive in the marketplace. At the same time, we're reevaluating, as David talked about, reevaluating how we go to market. And how we go to market, as Jon mentioned, it's the kind of cars, it's the price of the cars, it's how we communicate on our website. It's all of those items. And so we do think we have levers at this point that are lining up to be materially more competitive and to go to market with.

Thank you. Our next question comes from Scot Ciccarelli with Truist. Please go ahead. Your line is open.

Good morning, everyone. So historically, I'm going to take another shot at this GPU question. Historically, I believe the management teams have talked about needing to lower prices by about $500 per unit to see a real inflection in the sales pace. So that would obviously be meaningful to use Enrique's words. So is that in the range of how you guys are thinking about reducing your GPU?

Yeah. What I'd say is I don't think we've said $500 is a meaningful or a needed amount to drive sales. We do price elasticity testing. We're always in the market doing price elasticity testing. I'd tell you the number to move sales is well south of that. And in terms of what we're doing this quarter, look, we're trying different things. We are going out. It was, again, sizable for us to talk about on this call. We're going to test the impact on sales, again, in combination with an increase in marketing, kind of get a boost there overall. And we're going to report out in the fourth quarter call in April and communicate what we saw in the market. We're optimistic it's going to change the trend in sales. But I wouldn't say that $500 is what we need to move sales, if that's what you're saying.

CarMax (KMX) Q3 2026 Earnings Call Transcript

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