CarMax, Inc. is as a holding company, which engages in the retail of used vehicles and wholesale vehicle auction operator. It operates through the CarMax Sales Operations and CarMax Auto Finance (CAF) business segments. The CarMax Sales Operations segment consists of all aspects of its auto merchandising and service operations. The CAF segment provides vehicle financing to customers buying retail vehicles. The company was founded by Richard L. Sharp and William Austin Ligon in September 1993 and is headquartered in Richmond, VA.
The automotive retail industry in general and our business in particular are sensitive to economic conditions. These conditions could adversely affect our business, sales, results of operations and financial condition.
Our failure to realize the benefits associated with our omni-channel initiatives could have a material adverse effect on our business, sales and results of operations.
We collect sensitive confidential information from our customers. A breach of this confidentiality, whether due to a cyber-security or other incident, could result in harm to our customers and damage to our brand.
Our business is sensitive to changes in the prices of new and used vehicles.
We may experience greater credit losses in CAF’s portfolio of auto loan receivables than anticipated.
Our business is dependent upon access to vehicle inventory. Obstacles to acquiring inventory—whether because of supply, competition, or other factors—or a failure to expeditiously liquidate that inventory could have a material adverse effect on our business, sales and results of operations.
Our business is sensitive to conditions affecting automotive manufacturers, including manufacturer recalls.
Our results of operations and financial condition are subject to management’s accounting judgments and estimates, as well as changes in accounting policies.
The market price of our common stock may be volatile and could expose us to securities class action litigation.
We rely on third-party vendors for key components of our business.
Our business is subject to seasonal fluctuations.
Our business is sensitive to weather events.
We are subject to local conditions in the geographic areas in which we are concentrated.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
See Part I, Item 1 for a detailed description and discussion of the company’s business.
CarMax is the nation’s largest retailer of used vehicles. We operate in two reportable segments: CarMax Sales Operations and CarMax Auto Finance (“CAF”). Our CarMax Sales Operations segment consists of all aspects of our auto merchandising and service operations, excluding financing provided by CAF. Our CAF segment consists solely of our own finance operation that provides financing to customers buying retail vehicles from CarMax.