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"We don't want to sit back and wait for the economy to come back. We want to use this as an opportunity to improve," he said yesterday at company's annual meeting. "We can take about any punch that the external environment throws at us, and we're going to end up on top."
His message about the Goochland County-based retailer's future came despite a 17 percent drop in sales for the fiscal first quarter that ended May 31.
"It's hard to get excited about negative 17 percent, but I'm pretty excited about it," he said, because it was better than the 28 percent sales drop in the fourth quarter.
Folliard said recent moves will help CarMax endure the tough economy and make it stronger moving forward. The changes included cutting about 600 jobs, capping growth and streamlining the company's reconditioning procedures.
CarMax was able to cut $100 per vehicle in reconditioning costs, which improved profit margins. Based on selling more than 300,000 cars, Folliard said, the change should save the retailer about $30 million "for us to use as we chose."
He also told shareholders that CarMax was working to cut expenses while improving operations at its stores.
The chain also is poised to capitalize on the bankruptcies of General Motors Corp. and Chrysler LLC, which involve closing thousands of dealerships across the country. CarMax is losing its Chevrolet franchise in Wisconsin.
CarMax's main competition has always been new-car dealers that sell used cars, Folliard said. While many former dealers are turning their properties into used-car lots, he said selling used cars is tougher than most people think.
"It's not as easy to be a used-car dealer as it is when you have a new-car nameplate," he said, adding that new cars attracts buyers and the dealers have more access to credit. "We welcome the competition."
CarMax, like others in the auto industry, had a tough 2008. For the fiscal year that ended Feb. 28, earnings dropped 67 percent to $59.2 million, or 27 cents per share, compared with $182 million, or 83 cents, in the previous fiscal year.
Sales for the fiscal year fell 15 percent to $6.97 billion. Same-store sales fell 17 percent for the year, while total used-car unit sales dropped 8 percent.
Yesterday's meeting was held at the Richmond Marriott West, less than a half-mile from the retailer's first store on West Broad Street near Interstate 64, which opened in 1993.
At meeting, shareholders re-elected four board members and approved changes to the company's stock-incentive and employee share-purchase plans.
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Contact Louis Llovio at (804) 649-6348 or LLLovio@timesdispatch.com.
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