July 31 (Reuters) - Carvana ( CVNA ) forecast annual

core profit above analysts' expectations on Wednesday, driven by

strong demand for its used vehicles and improved inventory

management, which helped the used-car retailer protect its

margins.

During the pandemic, used car retailers such as Carvana ( CVNA )

increased their vehicle inventory, often buying at inflated

prices due to skewed new vehicle supply.

However, as new vehicle productions normalized, Carvana ( CVNA )

struggled to clear its inventory of used cars forcing it to sell

them at prices lower than acquisition costs and impacting

margins.

Carvana ( CVNA ), best known for its vehicle vending machines, has

been working to improve margins and return to profitability.

Earlier this year, it reported its first-ever annual

profit and has since been reducing inventory and cutting

advertising and other expenses to strengthen its balance sheet.

The company now expects its 2024 adjusted earnings before

interest, taxes, depreciation, and amortization (EBITDA) in the

range of $1 billion to $1.2 billion, compared with analysts'

average estimates of $890.97 million, according to LSEG data.

"We not only led the industry in retail unit growth, which

accelerated from Q1, but also delivered 1.4% net income margin

and a new record 10.4% adjusted EBITDA margin, which sets an

all-time high water mark for public automotive retailers," CEO

Ernie Garcia said.

Total retail units sold in the second quarter rose 33% to

101,440 and with the company expecting this number to rise

sequentially in the third quarter.

Carvana's ( CVNA ) reported a net income of $48 million for the

second quarter ended June 30, compared with a net loss of $105

million, a year earlier.