CarMax Inc. (NYSE: KMX) shares declined nearly 2% intra-day on Thursday after the used-car retailer outlined plans to reduce retail margins and increase marketing spending in the current quarter, despite third-quarter sales beating expectations.

The company reported earnings of $0.43 per share for the third quarter of fiscal 2026, topping the consensus estimate of $0.37. Revenue declined about 7% year over year to $5.8 billion but exceeded analyst expectations of $5.69 billion.

Retail used unit sales fell 8% from a year earlier, while comparable store used unit sales declined 9%.

Looking ahead, CarMax provided a preliminary outlook for the fourth quarter of fiscal 2026, outlining initiatives aimed at improving sales trends. The company said it planned to enhance price competitiveness by lowering retail used unit margins during the quarter.

CarMax also said it expects to increase marketing spending on a total unit basis compared with a year earlier, though to a lesser degree than in the third quarter. Marketing efforts will focus on customer acquisition to support vehicle purchases and overall sales as the company works to stabilize demand.