CarMax Pauses Buybacks Amid Margin Pressure and Leadership Transition

CarMax (NYSE: KMX) reported a challenging fiscal fourth quarter ending February 28, 2026, characterized by a net loss and a strategic shift in capital allocation. The used-car retailer posted net sales and operating revenues of approximately $5.95 billion, representing a 1% decline year-over-year. Despite the annual decline, the company saw a sequential recovery from the third quarter, where revenue had dropped 7%. Retail used unit sales fell by 0.8% year-over-year, a marked improvement over the 8% decline seen in the previous quarter. Management attributed this volume recovery to aggressive price reductions and increased marketing expenditures intended to stimulate demand. However, the push for volume impacted overall profitability. Total gross profit fell 9% year-over-year to $605 million. The company reported a net loss of $121 million, or $0.85 per share, though this figure was heavily influenced by a $141 million non-cash goodwill impairment charge and restructuring costs. Adjusted earnings per share dropped to $0.34, compared to $0.64 in the prior-year period. In a move that may concern shareholders, CarMax has paused its share repurchase program, citing leverage levels that are currently slightly above the company's target range. This shift in capital allocation comes as new CEO Keith Barr, who assumed the role in March, focuses on operational efficiencies and execution. The stock has faced significant headwinds, declining 37% over the last 12 months and 69% over the past five years.