Carmax Inc., the largest U.S. retailer of used cars, said on Wednesday it would delay the planned openings of several stores due to a sharp drop in vehicle sales in the past months amid record gas prices.
Carmax said comparable store used vehicle sales fell an average of 17 percent in June and July. It said it reduced its used vehicle inventory by about 9,500 units, or $150 million, by the end of July in response to the “unprecedented declines” from inventory levels at the end of May.
Carmax, which last month suspended its earnings forecast for its fiscal quarter ending February 2009, said it would open only one additional store in the remainder of the fiscal year, scrapping its initial plan to open five stores.
The remaining four stores will open in fiscal 2009, it said. The Richmond, Va.-based company currently operates 98 used vehicle stores.
“As a result of the current environment and in order to enhance profitability, we have decided to temporarily slow our store growth,” CEO Tom Folliard said in a statement.
The U.S. auto market has been hammered by a slowing economy and tighter consumer credit, as well as slumping demand for trucks and SUVs because of record high gasoline prices.
Carmax said it has aggressively reduced its store staffing levels and was currently evaluating all open positions in a bid to control costs.
