CarMax 2005 Annual Report Download - page 5

in-store system to help sales consultants deliver more
information consistently during the appraisal presenta-
tion to customers and a new sales management sup-
port system that helps sales managers monitor the most
significant measures of customer service and sales per-
formance on a real-time basis.
■Associate Development: Systematically identify, hire, train,
and continuously develop a broadly diverse group of talented
associates to support both our new store growth and continued
operational improvement. During the year, we successfully
generated more than 140 new managers to support
growth, as well as more than 1,500 other talented
associates.We also further developed the tracking
process that is allowing us to plan, develop, and monitor
the bench of talent we are building for the next four
years of growth.
■Company Culture: Maintain an enthusiastic, down-to-earth,
non-hierarchical business culture that treats every associate
and every customer with the respect and personal attention
they deserve, and lets us all have fun doing it. Being
named to the Fortune “100 Best Companies to Work
For” list was significant recognition of what we’ve
achieved here.We also initiated a company-wide
discussion of what should be retained, what should be
discarded, and what should be added to the CarMax
culture to keep us a healthy, effective, competitive
company for the next decade.
COMMUNITY INVOLVEMENT
We believe it’s important for CarMax to contribute
to the communities where we live and work. Shortly
after becoming independent, we formed the CarMax
Foundation and began analyzing where and how we
could have the most effective impact on our communities.
In fiscal 2005, we made our first grants, totaling just over
$1 million and focusing on three primary areas:
■At the national level, family automotive safety: We selected
three organizations for focus in fiscal 2005: Mothers
Against Drunk Driving (MADD), to expand the
program to 15 college campuses; Safe, Smart Women
(S2W), to expand car care and safety clinics aimed
at young women ages 16 through 24; and Healthy
Mothers, Healthy Babies, to expand booster seat educa-
tion programs and to form a coalition to help develop
uniform booster seat safety laws across the U.S.
■Richmond, education and youth development: Our home-
town efforts in Richmond,Virginia, target organizations
that focus on education and youth development, partic-
ularly among economically disadvantaged inner city
youth.We provided grants to 29 organizations including
Big Brothers, Big Sisters;The William Byrd Community
Center;The Central Virginia Food Bank; and Voices for
Virginia’s Children.
■Local, matching gifts and volunteer grants: Approximately
one-third of our funds are reserved to support matching
gifts by our associates to charitable organizations.We
have also begun providing Teambuilding Volunteer
grants to support groups of our associates who volun-
teer for local efforts such as Habitat for Humanity and
Meals on Wheels, and we make significant grants to
local charities as part of each CarMax grand opening.
WHERE WE’RE GOING
Growth Program
Our growth plan calls for adding new superstores at an
annual rate of 15% to 20%. Our focus since resuming
growth in late fiscal 2002 has been to add fill-in stores in
established markets and standard stores in new, mid-sized
markets.These represent the lowest risk, highest early return
opportunities, which have helped to offset the expense
penalties of our growth program buildup. At year-end, we
had opened 25 new superstores since resuming growth.
In fiscal 2006, we will be completing our fourth full year
of growth, and by mid-year fiscal 2007, we should be at a
point of roughly “steady-state” growth as we begin to see
each year a full annual cohort of stores reaching the appro-
priate sales and profit levels of basic maturity, which we
define as 48 months.We then would no longer be suffering
the added profit penalty of our growth ramp-up.
Fiscal 2006 also marks the beginning of our entry into
additional large multi-store markets with the launch of
marketwide advertising in Los Angeles. Our growth
program’s success to date, and a solid base of five stores with
the opening of our Ontario and Irvine stores in April 2005,
gives us confidence L.A. is the right place to restart our large
market growth program.We’re very excited about building a
full presence in the world’s largest auto retail market.
Going forward, our growth program will include a mix
of stores each year designed to balance the opening load
across our regions and the risk and rewards of new versus
established, and large versus small, markets.
THANKS
On behalf of myself, our shareholders, and our board of
directors, I want to thank all 11,000+ CarMax associates
for the tremendous job they did during the last year.They
remained focused on executing the business and delivering
for the customer despite the difficulties presented by the
used car market overall. Ultimately, it is only through their
efforts that we succeed as a company.
CARMAX 2005 3
Austin Ligon
President and Chief Executive Officer
March 30, 2005