Carmax (KMX) risk factors, FY2025 10-K

BUSINESS RISKS

1. 01If we fail to respond effectively to competitive pressures or to changes in the used vehicle marketplace, it could have a material adverse effect on our business, sales and results of operations
2. 02The automotive retail industry in general and our business in particular are sensitive to economic conditions. These conditions could adversely affect our business, sales, results of operations and financial condition
3. 03Our business is dependent upon capital to operate, fund growth and support the activities of our CAF segment. Changes in capital and credit markets could adversely affect our business, sales, results of operations and financial condition
4. 04CarMax was founded on the fundamental principle of integrity. Failure to maintain a reputation of integrity and to otherwise maintain and enhance our brand could adversely affect our business, sales and results of operations
5. 05Our business is sensitive to changes in the prices of new and used vehicles
6. 06A reduction in the availability of, or access to, sources of inventory, including parts used to recondition inventory, could have a material adverse effect on our business, sales and results of operations
7. 07Our failure to realize the benefits associated with our omni-channel platform or initiatives designed to leverage evolving technologies, including AI, could have a material adverse effect on our business, sales and results of operations
8. 08Our failure to manage our growth and the related challenges could have a material adverse effect on our business, sales and results of operations
9. 09Our success depends upon the continued contributions of our associates
10. 10We may experience greater credit losses in CAF’s portfolio of auto loans receivable than anticipated
11. 11Our failure to realize the benefits associated with our strategic investments, including actual or potential acquisitions, could have a material adverse effect on our business, sales and results of operations and we may incur impairment losses on our strategic investments in equity securities
12. 12We rely on third-party finance providers to finance a significant portion of our customers’ vehicle purchases. Accordingly, our sales and results of operations are partially dependent on the actions of these third parties
13. 13We rely on third-party providers to supply EPP products to our customers. Accordingly, our sales and results of operations are partially dependent on the actions of these third-parties
14. 14We rely on third-party vendors for key components of our business
15. 15Our business is sensitive to conditions affecting automotive manufacturers
16. 16Our results of operations and financial condition are subject to management’s accounting judgments and estimates, as well as changes in accounting policies
17. 17We may not be able to adequately protect our intellectual property, which could adversely affect our business, sales, results of operations and financial condition
18. 18Our business is sensitive to weather events
19. 19We have communicated certain environmental goals that are subject to related disclosure requirements. Failure to meet environmental goals or satisfy disclosure requirements could adversely affect our business, sales, results of operations and financial condition
20. 20We are subject to local conditions in the geographic areas in which we are concentrated

TECHNOLOGY AND DATA PRIVACY RISKS

1. 21We collect sensitive confidential information from our customers. A breach of this confidentiality, whether due to a cybersecurity or other incident, could result in harm to our customers and damage to our brand
2. 22We rely on sophisticated information systems to run our business. The failure of these systems, or the inability to enhance our capabilities, could have a material adverse effect on our business, sales and results of operations

REGULATORY AND LITIGATION RISKS

1. 23We operate in a highly regulated industry and are subject to a wide range of federal, state and local laws and regulations. Changes in these laws and regulations, or our failure to comply, could have a material adverse effect on our business, sales, results of operations and financial condition
2. 24We are subject to evolving regulations, disclosure requirements, standards and expectations relating to environmental, social and governance matters. Failure to satisfy these regulations, requirements, standards and expectations could adversely affect our business, sales, results of operations and financial condition
3. 25We are subject to various legal proceedings. If the outcomes of these proceedings are adverse to CarMax, it could have a material adverse effect on our business, results of operations and financial condition

GENERAL RISKS

1. 26The market price of our common stock may be volatile and could expose us to securities class action litigation