KMX CarMax Group

CarMax Inc. on Wednesday reported a 5.7% decline in quarterly profit, as sales fell short of expectations amid a continued weak market for used cars.

Shares in the company, which have gained 3% so far this year, fell 4.4% premarket to $53.30.

As new-car sales surge to record levels in the U.S. on robust incentives and cheap fuel, the market for used cars has slowed. But in its fiscal second quarter, CarMax reported that its used-vehicle sales rose 7%, helped by store openings, while average selling prices for used vehicles increased 2.3% to $19,530. Comparable used-car sales, which factors out store openings, climbed 3.1%.

CarMax, which aims to open 15 stores over the current fiscal year, opened three outlets during the quarter.

CarMax reported a quarterly profit of $162.4 million, down from $172.2 million a year earlier. But per-share earnings rose to 84 cents from 82 cents a year earlier, helped by share repurchases. Revenue rose 2.9% to $4 billion.

Analysts polled by Thomson Reuters had forecast earnings of 88 cents on $4.1 billion in revenue.

CarMax said earnings were dented by $6.8 million, or 4 cents a share, by the modification of equity awards held by the company's recently retired chief executive.

CarMax, which has been testing its own originations of subprime loans, said total income in its auto-finance unit slipped 2.4% to $96 million during the quarter.

The company bought back 2.4 million shares for $125.8 million during the quarter.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

September 21, 2016 08:45 ET (12:45 GMT)

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