CarMax 2005 Annual Report Download - page 17

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CORPORATE MANAGEMENT TEAM CARMAX 2005
15
■In fiscal 2006, we expect to open nine superstores,
including five standard-sized stores and four satellite
stores.We are adding two stores in Los Angeles, bringing
our total store count in this large market to five and
reaching, we believe, sufficient critical mass to support
a full L.A. television advertising program.
■We estimate that we have an 8%-10% market share of
late model, 1- to 6-year-old used cars within the trade
areas of our most mature stores.This benchmark implies
a $20 billion to $25 billion sales potential in today’s
dollars as our stores reach maturity and we achieve
full national scope.
■Our market share is significantly higher within a 5- to
10-mile radius of our most mature stores. Our satellite
store additions will help us to determine incremental mar-
ket share opportunities and optimal storing densities and
patterns, and to identify opportunities in smaller markets.
DEFENSIBLE COMPETITIVE
ADVANTAGE
■There have been numerous unsuccessful attempts to
replicate the CarMax model. Competitors who have
tried to copy our concept have typically failed because
they focused only on our consumer concept.They
ignored the hidden danger of failing to build strong
operating processes early in concept development.
■At present, we are fortunate to have no similar-format,
multi-market challengers.This advantageous competitive
landscape is allowing us to expand on our own
timetable, following our own strategic priorities.
■CarMax has a more than 11-year development advantage
over any challenger who attempts to copy our business.
Building an organization, developing specialized processes
and systems, refining execution…all take time.
■CarMax intends to stay ahead of any potential
competition through relentless attention to people,
processes, and execution.
OUTLOOK
■For the forseeable future, we believe we can achieve
average comparable store used unit growth in the range
of 4% to 8% per year. This range assumes modest
overall market growth, continued CarMax market share
gains, and the effect of higher sales growth rates at stores
that have not yet reached basic maturity.
■In fiscal 2006, we expect comparable store used unit
growth in the range of 5% to 9% and earnings in
the range of $1.20 to $1.30 per share. Our earnings
growth is expected to be fueled by incremental gross
profit contribution from both comparable and new
store sales growth.