June 21 (Reuters) - CarMax ( KMX ) reported a 33% fall

in first-quarter profit on Friday, as lower margins from

vehicles sold continued to impact the used-vehicle industry.

Pre-owned vehicle retailers have had a bumpy ride with

profitability worsening over the last few years as new vehicle

availability improved.

Better offers and trade-in deals on new vehicles have also

kept potential buyers at bay from considering used vehicles.

Used vehicle dealers have been forced to sell cars at

heavily discounted rates, a stark difference to the pricing

power they commanded during the pandemic, when new vehicle

supply was skewed.

CarMax ( KMX ) reported a net income of $152.4 million, or 97 cents

per share, in the quarter ended May 31, down from $228.3

million, or $1.44, per share a year ago.

Analysts expected a profit of 94 cents per share, according

to LSEG data.

For the reported quarter, overall revenue came in at $7.11

billion, falling short of analysts' estimates of $7.21 billion.

Used vehicle revenue fell 5.4% to $5.68 billion.

"Vehicle affordability challenges continued to impact our

first quarter (retail) unit sales performance, with ongoing

headwinds due to widespread inflationary pressures, higher

interest rates, and tightened lending standards," the company

said in a statement.

Analysts and industry experts have said that affordability

concerns among consumers continue to persist, further

exacerbated by limited supply of affordable vehicles.

CarMax ( KMX ) has employed a host of cost cuts, including

slashing marketing and capital expenditures, over the past few

years to help fend off a hit to margins.

Used-vehicle retail sales improved in May from a month

earlier, rising to the highest so far this year, according to

data from Cox Automotive.

Cox said that retail used-vehicle prices have been

consistently lower through the first five months of 2024

compared with a year earlier.

CarMax ( KMX ) shares shares slipped in and out of positive

territory in premarket trading.