CarMax’s near-term turnaround strategy is to sacrifice some gross profit per unit, reduce average retail prices, and at the same time, increase its marketing spend.
To compensate for those moves, CarMax is counting on a combination of greater sales volume; higher share for its captive, CarMax Auto Finance; cost reductions in other areas, including headcount; plus, greater all-around efficiency, executives said in the used car giant’s April 14 earnings call.
Keith Barr, CarMax’s new president and CEO, said the company expects to share more details on its turnaround plan in June, but safe to say, the plan includes an emphasis on improving CarMax’s digital-commerce channel, for both customers and employees.
“If it takes us six clicks to do something, how can we make it three? What are the things that really matter most to customers?” Barr said in the earnings call.
CarMax announced Barr’s appointment as president and CEO on Feb. 12, 2026. He is the former CEO of InterContinental Hotels Group. Some lessons learned in the hospitality industry apply to auto retail, he said.
“On the surface, hotels and used cars may seem different, but at their core, both businesses succeed by delivering the right product, at the right price, in the right way, for the customer,” Barr said in the earnings call.
Affordability is number one
CarMax executives said their first job is to get retail prices down and stimulate sales.
“Price really matters to the consumer,” said Tom Folliard, CarMax’s interim executive chair of the board, in the earnings call.
“We felt like, lower the prices, get sales moving in the right direction, and then pay for it by taking cost out of the business,” Folliard said.
CarMax, based in Richmond, Virginia, had 256 used-car stores across the country as of Feb. 28, the company said in an annual report filed with the SEC.
The average selling price for CarMax was $26,019, for the fourth quarter of CarMax’s fiscal-year 2026, which ended Feb. 28, 2026. That was down 0.4%, versus the same quarter a year ago — a step in the right direction, after recent quarters in which CarMax says its prices were too high for the current demand.
For the latest quarter, CarMax average used-vehicle gross profit per retail unit was $2,115. That was down $207 per unit, or about 9%, from a year ago.
“We took our prices down. You can see that in the GPU,” said CarMax CFO Enrique Mayor-Mora, in the call. In addition, CarMax increased its marketing spend aimed at acquiring more vehicles, and made improvements to its online selling capabilities, he said.
“I would tell you, out of those three things, pricing certainly we believe had the biggest impact, although we think all of those levers impacted our trend positively,” Mayor-Mora said.
In the fourth fiscal quarter, retail unit sales were down 1.9% on a comparable-store basis versus a year ago. That’s an improvement over a 9% drop year-over-year in the third fiscal quarter and a 6.3% drop YoY in the second fiscal quarter.
CarMax reported a net loss of $120.7 million for the fourth fiscal quarter, versus a net profit of $89.9 million in the year-ago quarter. Not counting restructuring charges and other one-time items, net income would have been positive for the quarter, the company said.
For the full fiscal year, CarMax had net income of $247.3 million, versus $500.6 million a year ago.
Changes at the top
CarMax launched the start of its turnaround strategy late last year. In November 2025, CarMax announced then-CEO Bill Nash would step down from that position, and from board membership.
At the same time, the company began a search for a permanent CEO. In the meantime, CarMax named David McCreight, who was already a board member, interim president and CEO. As noted, Folliard was named interim executive chair of the board. Their appointments took effect Dec. 1, 2025.
With Barr’s appointment, McCreight reverts to being an independent director on the board, the company said. Folliard resumes his prior duties as non-executive chair of the board.
Meanwhile, on April 9, CarMax announced it would add William “Bill” Cobb and Jim Kessler as new members of the CarMax board of directors. At an annual shareholders meeting in June, CarMax will ask shareholders to approve the full slate of directors, including Barr, Cobb, and Kessler.
Cobb has been CEO of Frontdoor, a leading provider of home warranties based in Memphis, Tennessee, since 2022, and chairman since 2018. Previously, he was president and CEO of H&R Block from 2011 to 2017.
Kessler has been CEO of RB Global since 2023, previously serving as COO beginning in 2020. He has more than 20 years of experience in the automotive industry, CarMax said. RB Global, headquartered in Westchester, Illinois, owns vehicle marketplaces such as Ritchie Bros. Auctioneers and IAA.
“I believe there's a tremendous opportunity ahead to better meet the needs of today's consumer,” Barr said in the call.
