CarMax second-quarter profit falls as used-car demand slumps

Sept 25 (Reuters) - CarMax KMX.N reported a fall in second-quarter profit on Thursday, as waning demand for used vehicles continued to weigh on the U.S. pre-owned vehicle market, sending the company's shares down nearly 13% in premarket trade.

The used-car retailer is grappling with rising repair and clean-up costs, along with softening consumer demand amid elevated interest rates and tariff-related headwinds

"While this was a challenging quarter, we remain confident in our long-term strategy and the strength of the earnings model that we have built," said CEO Bill Nash.

The Richmond, Virginia-based company sold 199,729 units of used vehicles in the June-to-August period, down 5.4% from a year ago, while sales of wholesale vehicles also fell 2.2% year-over-year.

An Evercore ISI analyst in a research note earlier this week said while CarMax is expected to return to positive same-store sales growth in the third quarter, competitive pressure -especially from Carvana CVNA.N - remains a key risk, and any delay in execution could stall the recovery.

Peer AutoNation AN.N said during its July earnings call that automakers are likely to maintain competitive pricing on flagship models, while gradually adjusting prices across their broader lineup.

Income from CarMax's auto finance business dropped 11.2% to $102.6 million, as a higher provision for loan losses offset gains in net interest margin.

CarMax reported a net profit of $95.4 million, or 64 cents per share, for the quarter ended August 31, compared with $133 million, or 85 cents per share, in the year-ago period.

Quarterly revenue fell 6% to $6.59 billion, compared with Wall Street estimates of $7.02 billion, according to data compiled by LSEG.