Welcome to the Daily 5 report for Thursday, Nov. 6.
CarMax fired CEO Bill Nash because he couldn't keep up in the used-car business with Carvana — at least, that's the assessment of one J.P. Morgan analyst. Officially, CarMax said today it terminated Nash, 56, because it needed to "strengthen its business."
This clearly was a financial decision. CarMax's performance and falling stock price since 2023 have been the exact opposite of what's going on at Carvana, where profits are healthy and the stock generates billions for the co-founding Garcia family.
Want to illustrate a reason Nash is out? Look at the five-year stock chart for CarMax. Then look at the five-year stock chart for Carvana.
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If you are on the CarMax board, you would probably wonder why your stalwart longtime used-car company could get so outflanked by a startup. You might ask why CarMax didn't improve the look of its stores to keep up with Carvana's flashy vending machines that dot the landscapes around many U.S. metropolitan areas. You might also ask why your stock kept falling while Carvana's kept rising until recently.
A CarMax board member or investor would likely want to know why retail unit sales are falling 8 to 12 percent in the current fiscal third quarter. But Carvana in its recent third quarter sold 155,941 used vehicles, up 44 percent from the same time a year earlier and a rise of 8.8 percent from the second quarter, as we reported at the time.
You might even ask why it took until now for CarMax to boost its marketing budget. The company said today its marketing spend "is expected to increase materially year-over-year in the third quarter as CarMax supports its new brand positioning launch."
So far, investors don't seem to be buying any of this. CarMax shares plunged all day, closing down 24 percent at $30.88.
But let's give the CarMax board some credit for not mincing words about Nash's ouster in the company's 8-K government filing. Most companies call these firings a "retirement" and tell the public the failed CEO wanted to "spend more time with family." CarMax said this was a termination.
Plenty of other news broke today. Nissan CEO Ivan Espinosa confirmed that the Japanese automaker would end production by the end of this month at the joint venture factory it operates with Mercedes-Benz in Mexico, Hans Greimel reported.
That's all for now. Enjoy the rest of your day. If you want to view this story on your browser click here.
— Philip Nussel, online editor
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