CarMax Earnings Call Nuggets: Inflexion Point and Mix of Vehicles
CarMax, Inc. (NYSE:KMX) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Simeon Gutman – Credit Suisse: Tom, one question with maybe one or two little parts, and I’ll say all upfront. First, regarding the vehicle population, the data is pointing to an inflection point in the zero to EUR5 range. Your mix comments alluded to this to some degree, but I’m curious if you can share any anecdotes of whether you’re starting to sense or see a change in the complexion of some of the vehicles that are coming through your channel? And then the second part of that question, is the store pipeline based on the press release it looks pretty robust over the next 12 months, I think it 17 stores and so unless the back half of next year is very light might you end up doing either the high-end or a little bit more than the high-end of the range of store growth?
Tom Folliard – President and CEO: So, although that was a two part question, they were two very different questions I mean. As far as the mix is concerned, we really haven’t seen much of a change. If you look at what’s happened with new cars and supply it does feel like we’re heading towards an inflection point, but in terms of reduced – divide our inventory into two big segments zero to four and five to ten there was very little change in our mix between those two segments. As I said last quarter we saw some movement within zero to four, but not as a group. So, that was very similar this quarter. In terms of the store mix we have not changed what our plans are of 10 to 15 stores including this year we said for the next three years, so that’s this year and the following two. What you see in the next 12 months is just a reflection of timing. So it really hasn’t changed at all. It will be kind of a higher volume over the next 12 months than the 12 month periods around it. We haven’t changed our projections at all.