Sept 26 (Reuters) - Used car retailer CarMax ( KMX )

beat Wall Street estimates for second-quarter revenue on

Thursday as price cuts on used vehicles boosted unit sales,

especially in the retail segment, sending its shares up 6.4% in

afternoon trading.

Pre-owned vehicle retailers have had a bumpy ride, with

profitability worsening as availability of new vehicles improved

after tight supply during the pandemic, which had pushed up

prices of used cars.

CarMax ( KMX ) has employed a host of cost-cutting measures over the

past few years to protect its margins, including slashing

marketing and capital expenditures.

The company reported a 2.9% increase in the number of

vehicles sold in the second quarter. In its retail segment, unit

sales rose 5.1% and revenue was up 1.5% from a year ago.

However, the tailwinds in unit sales were offset by a

decline in CarMax's ( KMX ) income from lending as the company had to

increase provisions for loan losses.

Weaker consumer budgets have negatively impacted car

loan payments for some borrowers,

data has shown

.

The company's overall quarterly revenue of $7.01 billion

was down about 1% from a year ago. However, it was above

analysts' average estimate of $6.79 billion, according to LSEG

data.

Despite higher provisions, the key takeaway is that there is

a "bigger inflection in retail sales," said Sharon Zackfia,

equity analyst at William Blair.

"We believe the momentum in future quarters can more

than offset higher loan provisions," Zackfia said.

The company's second-quarter average selling price per

vehicle was down 4.6% and 12.9% in used retail and wholesale

units, respectively.

The company's earnings per share of 85 cents in the second

quarter was below the estimates of 86 cents, but were 13.3%

higher than 75 cents a year earlier.