At the end of the quarter, CarMax's omnichannel initiative, which involves allowing customers to shop however and from wherever they want and in a personalized way, was available to about 60 percent of its customers.
In December, the retailer's plan was to complete the omnichannel rollout by February 2021. But CEO Bill Nash said in the earnings call that the company was now focused on implementing the most relevant aspects of the omnichannel experience — namely online sales and curbside pickup — as quickly as possible. It's a departure from its otherwise systematic approach, in which it began training store managers and associates weeks before the locations' omnichannel offerings were to be implemented.
"Obviously, the in-store training is out the window at this point," Nash said. The company is instead making sure customers can do much of the buying and selling process online and ensuring they have support from its Customer Experience Centers while also putting its curbside pickups in place. Nash said the company aims to have curbside pickup available at all of its stores "within the next week or so."
Meanwhile, there has still been some demand for used vehicles.
"Every day I'm in touch with the stores, and every day I hear stories about who's coming into the stores right now," Nash said.
Those customers include medical providers who need a car to get to work, customers who have lost their jobs and need a smaller vehicle, people who are just selling their vehicles to get cash, and customers who had been using ride-hailing but no longer feel comfortable doing so.
"So the consumers that are in there today are ones that need a vehicle," Nash said. "You're not having consumers come in who would [simply] like to have the vehicle at this point, and I think that's similar to what we saw back in '08 or '09."
Last week, CarMax reported record sales and earnings for its fourth quarter and fiscal year, ended Feb. 29, and momentum continued into March — for about a week.
After that, business fell off dramatically as the coronavirus pandemic began to spread throughout the U.S., forcing businesses to close, causing mass layoffs and sapping consumer demand.
"In all my years at CarMax, I've never experienced a month like we had in March," Nash said, adding it was "the most volatile month I've ever seen."
For CarMax, sales have since dropped "significantly," he said. As of Friday, April 3, almost half of the company's 217 stores were either closed or running with limited options, and consumer demand had "progressively deteriorated."
"All of the open stores are substantially off on sales year over year over the last two weeks," falling by at least half, Nash said.
The company is providing pay and benefits for up to 14 days for associates who have been impacted by the closures. Last week, it was still assessing its options for beyond 14 days.
Nash didn't say when he expected stores to reopen, noting that the situation was fluid. "We have a central response team in place developing and implementing plans for multiple scenarios, as this is a dynamic situation with new store openings and closings daily," he said. "Our goal is to keep our locations open as long as possible to support the essential needs of our customers while also providing income to our associates."
In its fourth quarter, CarMax's net sales and operating revenue rose 15 percent to $4.96 billion on total used-vehicle sales that increased 15 percent to 206,718. Net earnings grew 12 percent to $214.9 million. The company's comparable store sales were up 11 percent in the period.
For its fiscal year, CarMax's net sales and operating revenue increased 12 percent to $20.32 billion on total used-vehicle sales that were up 11 percent to 832,640. Comparable store sales rose 7.7 percent. Net earnings grew 5.5 percent to $888.4 million.
