CarMax 2014 Annual Report Download - page 3

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1 CarMax Fiscal 2014
Letter to Shareholders
During fiscal 2014, we celebrated our 20th anniversary. CarMax was created in 1993 to address a strong
consumer need for a better way to buy used cars. Since opening our first store in Richmond, Virginia, we’ve
sold more than 5 million retail vehicles and expanded to 133 stores nationwide. We opened 13 stores in fiscal
2014 – our most in any one year. We anticipate a similar schedule of store openings for the next two years as
we continue to fill in our national footprint. We were pleased this year to report double-digit growth in our
estimated market share. Our data indicates that we grew share by 16% in the age 0 -10 used vehicle market.
During fiscal 2014, total revenues increased 15% to $12.6 billion. We sold more than 877,000 vehicles,
including nearly 535,000 retail vehicles and more than 342,000 wholesale vehicles at our auctions. Our
comparable store used unit sales growth of 12% was our strongest since fiscal 2002. CarMax Auto Finance
(CAF) income increased by 12% to approximately $336 million and our loan portfolio grew to more than
$7 billion by year end. Net earnings rose 13% to $492.6 million or $2.16 per diluted share.
Superior Customer Experience
As we accelerated our store openings this year, we continued our focus on enhancing the customer experience
– both online and in our stores. Our carmax.com website and mobile apps are essential tools used to drive
customer traffic, and we continue to enrich their functionality to meet customer needs. This year we added
more personalized elements, improved the search capabilities, redesigned the vehicle listings to be more
impactful and scannable, added larger high definition photos with zoom capabilities, and enabled shoppers to
make online appointments and hold cars for up to seven days.
Our web visits are measures of consumer interest in CarMax, and we believe increasing numbers of our
customers are starting with us online. For the full year, our website visits grew to an average of approximately
12 million per month, increasing more than 32% from the previous year. By the end of fiscal 2014, visits to our
mobile site represented 30% of total visits, while visits utilizing our mobile apps more than doubled compared
with a year earlier - to more than 12% of our online traffic. In fact, by the end of fiscal 2014, 57% of our online
traffic came from devices other than desktops or laptops.
While many customers start their search for the perfect vehicle online, our stores remain critical to the sales
process. Many elements of the car-buying process, including test drives, financing and the completion of final
paperwork, are still best handled at a store, with the assistance of well-trained associates. We continue to
refine our recent store redesign, which includes greater utilization of technology and touch screen search
capabilities, as well as other processes that elevate the customer experience, such as having all cars on the
display lot unlocked and available for browsing and giving customers the option of test driving vehicles on their
own.
During fiscal 2014, we also added 3 new wholesale auction sites, which are now conducted at 60 of our used
car superstores. Since our inception, we’ve sold nearly 3 million wholesale vehicles at our auctions. Each year
we continue to add more functionality to carmaxauctions.com, which allows dealers to manage their own
accounts and provides them with a sneak-preview of our nationwide wholesale inventory, including
photographs and vehicle history reports. Wholesale customers also can receive email alerts when specific
vehicles become available at an upcoming auction.
Financial Highlights
% Change Fiscal Years Ended February 28 or 29
(Dollars in millions except per share data) ‘14 vs. ‘13 2014 2013 2012 2011 2010
Operating Results
Net sales and operating revenues 15% $ 12,574.3 $ 10,962.8 $10,003.6 $ 8,975.6 $ 7,470.2
Net earnings 13% $ 492.6 $ 434.3 $ 413.8 $ 377.5 $ 277.8
Diluted net earnings per share 16% $ 2.16 $ 1.87 $ 1.79 $ 1.65 $ 1.24
Other Information
Capital expenditures 32% $ 310.3 $ 235.7 $ 172.6 $ 76.6 $ 22.4
Used car superstores, at end of year 11% 131 118 108 103 100
Associates, at end of year 11% 20,171 18,111 16,460 15,565 13,439