CarMax (KMX) Q1 earnings

shares Carmax It fell nearly 8% during midday trading on Wednesday after the company beat Wall Street’s quarterly earnings expectations and its new CEO detailed a high-profile turnaround strategy for the company.

Here’s how the company performed in its fiscal first quarter, compared to average estimates compiled by LSEG:

• EPS: $1.31 versus 95 cents expected
• profit: $8.01 billion versus $7.42 billion expected

Despite the volatility, questions remain about the company’s ability to grow and cut costs under the plan as it faces tougher market conditions. The used car retailer reported margin pressure and lower gross profit per retail used vehicle.

CarMax’s gross profit was $854.4 million, down 4.4% compared to last year’s fiscal first quarter. Total retail profits for used vehicles fell 9.5%, and gross retail profits per used unit were $2,177, down $230 from last year’s record, the company said. Its net revenues increased by 6.2% compared to approximately $7.6 billion in the previous year.

CarMax reported net earnings of $185.6 million, down 11.8% from $210.4 million in the same period last year.

CarMax shares are still up about 25% this year, including a roughly 16% increase since former CarMax CEO Keith Barr. InterContinental Hotels GroupHe began leading the company on March 16.

Barr said he would release more details about his plan — which is expected to take several years to implement — in late fall, but noted that leadership is “very confident about it.”

“Our new strategy is focused on great offerings, easy experience, value addition, and lean operation, all of which, again, will lead to long-term sustainable growth, which will create value for our shareholders,” he told CNBC during an interview.

Barr said he spent his first three months at CarMax learning the auto business better, understanding the company’s operations and identifying potential growth and cost-cutting areas, while aiming to simplify car buying processes for customers.

“There’s definitely a huge opportunity for growth here by having a really integrated, growth-oriented strategy that leverages technology, leverages our scale, leverages our stores, which will provide sustainable growth as well,” he said.

His initial quick changes ranged from making tweaks to the CarMax website, such as showing monthly payments and implementing an AI call agent service, to trying to better streamline the customer experience from online to store.

Barr was brought in after massive declines in stocks led to pressure on former CEO Bill Nash to step down in November.

Shares of CarMax’s largest competitor, Carvanaalso fell more than 7% during midday trading on Wednesday, which coincided with the online car retailer revealing its plans for its new franchise. Stellantis Stores. Carvana’s plan includes using franchise stores to service vehicles and offer test drives, but it will still sell its vehicles exclusively online, even if customers are in stores.

Barr declined to comment on Carvana’s plans, but said CarMax has found that the vast majority of used car customers still want to visit stores and see the car they plan to buy before doing so.