By Nate Wolf
CarMax rose Wednesday after activist investor Starboard Value revealed a stake worth around $350 million in the used-car retailer and nominated two candidates for the company's board.
Starboard is pushing for a swift turnaround at CarMax, which last month appointed Keith Barr as its new CEO. Barr takes the helm next Monday. The activist firm nominated its own chief executive, Jeff Smith, and Frontdoor CEO William C. Cobb as new board directors.
"The leadership transition presents an opportunity to refocus the organization, improve governance, and restore momentum," Smith wrote in a letter to Barr outlining Starboard's recommendations. "We hope, given your experience, that you can move quickly to make meaningful and impactful decisions."
CarMax didn't immediately respond to a request for comment from Barron's.
Shares of CarMax gained 0.5% to $42.34 on Wednesday. As of the close of trading Tuesday, the stock had fallen 42% over the last 12 months and was off 73% from its record closing high of $154.85 in 2021.
CarMax's sales were on track to drop for the fourth consecutive year after booming toward the end of the Covid-19 pandemic. At the same time, sales, general, and administrative expenses have remained stagnant. The company's closest competitor, Carvana, has grown sales and earnings over that period.
Upgrading CarMax's digital trade-in experience is a priority for Starboard. The company operates both in-person and online businesses, while Carvana focuses on digital channels.
"By simplifying and streamlining the digital offer process -- fewer clicks, near-instant valuations, clearer steps -- CarMax can capture a greater share of sellers already engaging online," Smith wrote in his letter to Barr, adding that CarMax's physical stores also were part of the company's appeal.
Starboard sees opportunities to lower per-unit costs by optimizing the company's car reconditioning process, and to maintain sales volume through more dynamic pricing. The activist firm also is pushing for a budgeting review and the use of artificial intelligence to help reduce sales, general, and administrative expenses.
CarMax has an auto financing arm called CarMax Auto Finance, which accounts for around 2% of revenue and focuses on prime borrowers. Starboard wants this unit to expand into "adjacent, and marginally lower-credit tiers."
Write to Nate Wolf at nate.wolf@barrons.com
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March 11, 2026 09:58 ET (13:58 GMT)
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