To offset the worst two-month drop in its history, CarMax Inc. is slowing its expansion plans, cutting inventory and adjusting staffing levels.

The Goochland County-based auto retailer said a 17 percent drop in comparable store used-car unit sales in June and July forced the changes. Comparable store sales track vehicle sales at stores open at least a year, a key barometer of a retailer's health.

CarMax officials would not say how many vehicle sales the drop represented. It will not release that number until it reports fiscal second-quarter earnings Sept. 22, said company spokeswoman Lisa Van Riper.

In the same period last year, the three months that ended Aug. 31, the chain sold 96,102 used cars.

Van Riper said yesterday that the sales drop in "back-to-back months are unprecedented in the history of our company."

In a release yesterday, President and CEO Tom Folliard said the sales drop mirrored a rise in gas prices that started around Memorial Day, when the national average for a gallon of gas was $3.98, according to AAA Mid-Atlantic.

Because of the drop in sales, the chain cut its inventory by 9,500 vehicles, worth $150 million, CarMax officials said. The chain would not say how many cars it keeps in inventory, but did say it altered its vehicle mix to better appeal to buyers.

CarMax also is scaling back expansion. It opened five stores this year and had planned to open five more by February, the end of its fiscal year. Instead it will open only one more, in Hickory, N.C., this fiscal year.

The remaining new stores will be pushed back until the next fiscal year.

CarMax has 98 stores in 26 states.

In another move, CarMax said it is controlling overhead expenses by reducing employee staffing through scheduling and attrition.

Van Riper would not discuss details about the staffing changes, but said layoffs would be a last resort.

The company employs 15,626 worldwide, and 1,165 full-time equivalent employees locally.

George Hoffer, a professor of economics at Virginia Commonwealth University specializing in the auto industry, said CarMax is in a unique position to weather the storm.

CarMax won't get hurt in the long run because "there is no one in position to pick up the slack," he said.

Since no other company sells used cars on the scale CarMax does, the chain will have the space it needs to step back and regroup, he said.

Shares of CarMax closed at $14.87 yesterday, down 63 cents.
Contact Louis Llovio at (804) 649-6348 or LLLovio@timesdispatch.com.