CarMax pulls financial targets timeline amid whipsaw tariff concerns

Good morning. As earnings season continues, uncertainty around tariffs is leading some companies to pull timelines for financial targets.

CarMax, the largest retailer of used cars in the U.S., reported results on Thursday for its fourth quarter that ended Feb. 28. But missing expectations and backing away from offering a long-term financial goals timeline, “given the potential impact of broader macro factors,” sent its stock price tumbling. At market close, CarMax shares were down about 17% amid a broader stock market selloff. 

Bill Nash, president and CEO of CarMax, was asked on Thursday’s earnings call for further explanation of why the timeline was removed and whether the company had a pessimistic outlook on the economy. “It definitely wasn’t pessimistic,” Nash said.

He added: “Why put a target out there that’s really speculative, not knowing exactly where this environment is going to go?” Despite publicly not offering guidance, the company still intends to reach its long-term goals, he said.

CarMax is focused on growing sales and the bottom line, Enrique Mayor-Mora, EVP and CFO, said on the call. “I think that's what's important in this kind of environment,” he said. “At the appropriate time, we'll come back with a timing outlook as well. We just need some more stability in what's out there.”

The company’s fiscal Q4 net earnings per share was $0.58, up 81% versus a year ago, but missed analyst expectations of $0.66. And, the withdrawal of CarMax’s timeline to reach 2 million units of sales, $33 billion of annual revenue, and more than a 5% market share of up to 10-year-old vehicles “adds further uncertainty to high market uncertainty around U.S. tariff policy,” David Whiston, a strategist for Morningstar, wrote in an analyst note on Thursday. In addition, the company only updates its long-term goals at fiscal year-end. “We are maintaining our fair value estimate but will reassess all modeling inputs once the 10-K is filed,” he writes.

CarMax (No. 141 on the Fortune 500) reports its latest financial results in the shadow of a 25% tariff on auto imports to the U.S. that went into effect last week. U.S. car sales got a boost in March in anticipation of the added costs due to tariffs.

New car prices are definitely going to go up due to tariffs, Nash said during the earnings call. “I think, over time, what could happen is that the used car prices will also go up,” he said. “Now the question is how much will they go up over what period of time.” 

CarMax isn’t the only Fortune 500 company this week that decided to pull some of its guidance. "Given the lack of economic clarity, it is premature at this time to provide an updated full-year outlook,” Delta Air Lines announced in its earnings report on Wednesday. In the first quarter, Delta’s revenue was $14 billion, up 2% year over year, and net income rose to $240 million, up from $37 million last year.

Have a good weekend. See you on Monday.

Sheryl Estrada
sheryl.estrada@fortune.com

This story was originally featured on Fortune.com