Good morning. My name is Kim, and I will be your conference operator today. At this time, I would like to welcome everyone to the CarMax Fiscal 2019 4th Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. I would now like to turn the call over to Kathryn Kenny, Vice President, Investor Relations.
Thanks, Kim, and good morning, everyone. Thank you for joining our fiscal 2019 4th quarter earnings conference call. I'm here with Bill Nash, our President and Chief Executive Officer and Tom Reedy, our Executive VP and CFO. Let me remind you that our statements today regarding the company's future business plans, prospects and financial performance are forward looking statements that we make pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current knowledge and assumptions about future events that involve risks and uncertainties that could cause actual results to differ materially from our expectations.
In providing projections and other forward looking statements, the company disclaims any intent or obligation to update them. For additional information on important factors that could affect these expectations, please see the company's annual report on Form 10 ks for the fiscal year ended February 28, 2018, filed with the SEC. Thank you in advance for asking one question as usual and getting back in the queue for more follow ups. Bill?
Great. Thank you, Catherine. Good morning, everyone, and thanks for joining us. Today, I'll start with a 4th quarter highlights. After that, I'll turn the call over to Tom and he will discuss SG and A, Investments and Consumer Finance.
And then I'll share an overall update on our omni channel rollout, which has been very well received. And then as always, I'll open it for your questions. Starting with the Q4 results, I'd like to reiterate what I said in the earnings release. We are pleased with our double digit pre tax earnings growth, even after adjusting for the discretionary bonus we paid last year to eligible associates. We achieved this in the midst of continued investments in our business and our associates.
This is a testament to the strength of our diversified business model and ongoing focus on operational efficiencies. Used unit comps grew by 2.8% compared to a negative 8% in the prior year's 4th quarter. They were driven by strong conversion, partially offset by lower store traffic. While we were pleased to report positive comps this quarter, we believe they were affected by delays in the February tax refunds relative to last year, continued higher acquisition prices and a robust competitive environment. Total used units grew by 5.6%.
As you know, we track market share data on a calendar year basis and report it once a year in Q4. Our data indicates that our share of 0 to 10 year old vehicles in our current comp markets fell from approximately 4.5% in 2017 to 4.4% in 2018. While this is disappointing, the decrease in share occurred earlier in the year started to reverse in the second half of the year when we saw share gains. This year's decrease was in comparison to an almost 7% growth in comp market share in calendar year 2017, which was our largest increase in 4 years. Our website traffic grew in the 4th quarter by 13%.
Our retail gross profit per used unit remained stable at $2,166 compared to $2,147 last year. As we shared in the past, there are 2 primary factors that impact our decisions around gross profit per unit. The first is ensuring that our prices are competitive in the marketplace. 2nd, we focus on optimizing total gross profit dollars by balancing margin per vehicle and unit sales. We are confident in our price competitiveness, but as always, we will continue to monitor and test pricing elasticity.
Wholesale units grew by 3.7% compared to last year's Q4 and gross profit per wholesale unit grew to $9.77 this quarter compared to $9.46 in the prior year period. Other gross profit was a strong contributor to the quarter, increasing by almost 42% or $32,000,000 As we mentioned earlier this year, we secured provider cost decreases related to EPP revenues. We used a portion of these funds to improve the margins and the remainder to selectively reduce prices, which drove increased penetration. Service margin benefited from comp sales growth as we were able to leverage service overhead and third party finance fees benefited from the shift in our sales mix by finance channel. This explains the majority of the increase.
The remainder relates to a positive adjustment to our EPP cancellation reserve as a result of our annual model update a discretionary bonus of approximately $4,000,000 that we paid to our service department associates in last year's Q4. Before I turn the call over to Tom, let me discuss our sales mix and store openings. As a percentage of our sales, 0 to 4 year old vehicles decreased to about 72% versus 76% in the Q4 of last year and 77% in the 3rd quarter. Total SUVs and trucks accounted for about 46% of our sales, up from 43% this time last year. During the Q4, we opened 5 stores, which included 3 stores in new television markets: Buffalo Montgomery, Alabama and New Orleans.
We also opened stores in our existing television markets of Orlando and Portland, Oregon. During the Q1 of fiscal 2020, we plan to open 3 stores, one of which we opened earlier this week and represents our 2nd store in the Memphis market. We will also open 2 stores in Texas, which are new markets, Waco and McAllen. Tom?
Thank you, Bill. Good morning, everyone. On SG and A, expenses for the quarter increased 5 percent to $429,000,000 Factors increasing SG and A expense in the 4th quarter included the opening of 19 stores since the beginning of Q4 of last year, which represents a 10% growth in our store base our continued investment in technology platforms and digital initiatives and an increase of $3,900,000 or $19 per unit related to share based compensation expense. SG and A per unit was 2,380, a $17 decrease year over year. We are pleased to show SG and A leverage as it demonstrates that we're able to offset some of the growth in spend with efficiencies and staffing optimization.
I'll remind you that within the comp and benefits line, prior year amounts included roughly $4,000,000 of the discretionary bonus that was paid to eligible associates last year. Also, the timing of our advertising spend last year was weighted towards the end of the year, which accounts for the relative lack of growth in advertising dollars this Q4. We continue to invest in 3 primary areas: our associates, our legacy systems and our digital initiatives. For associates, this includes a variety of wage adjustments and health care plan enhancements. Our associates are vital to our success and maintaining a very competitive compensation and benefits program is key to attracting and retaining the best talent.
In order to execute our omnichannel vision, we must continue to upgrade our legacy operating systems. While this spending won't offer a short term return, it is critical to our future competitive position. We will also continue to invest in digital initiatives. We are developing and implementing tools that help our associates be more efficient and effective. In addition, we continue to introduce online enhancements to improve the customer experience.
Now moving over to CapEx. We expect to spend $350,000,000 for fiscal 2020. That's roughly $50,000,000 above FY 2019 and this spend includes a shift in some spending originally planned for fiscal 2019, the 13 FY 2020 stores plus land acquisition for future openings and 3 customer experience centers. Looking out to fiscal 2021, are in a position to open a similar number of stores as we have targeted in the last few years. However, our business model is clearly evolving and we will continue to evaluate both the number and type of locations we need going forward.
Finally, we plan to support shareholder returns by continuing to invest in our capital structure. During the Q4, we repurchased 4,400,000 shares for $270,000,000 For the full year, we returned $903,000,000 buying back 13,600,000 shares compared to about 9,000,000 in FY 2018. While I may be stating the obvious, the return on this investment shows up in the difference between net income growth and EPS growth, roughly 6.5 percentage points for the fiscal year. We have over $2,000,000,000 remaining in our current stock repurchase authorization. Now moving to cap and our financing results.
Our 3rd party lending partners continued their strong performance. Tier 2 executed especially well year over year accounting for 19.5% of used unit sales compared with 15.4% last year. While Tier 3 represented 10.7% of sales compared to 11.7% last year, Their performance is measured by sales to applications continues to be very solid. CAF penetration net of 3 day payoffs was 42.1%, down marginally from last year's Q4. CAF's net loans originated in the quarter grew by 4.5 percent to $1,500,000,000 The modest decline in penetration slightly offset our sales growth and the small increase in average amount financed.
CAFD income increased $2,600,000 to $104,000,000 This was a result of the growth in average managed receivables, partially offset by the continued slight compression in portfolio interest margin. Total portfolio interest margin was 5.5 percent of average managed receivables compared to 5.6% in both the Q4 of last year and this year's Q3. For loans originated during the quarter, the weighted average contract rate charged to customers was 8.7% versus 7.9% a year ago and 8.5% in this year's Q3. Our provision for loan losses at 42,000,000 dollars grew in line with the portfolio, and the allowance for loan losses was 1.10% of ending managed receivables, consistent with both last year's Q4 and with the Q3. Now I'll turn the call back over to Bill.
Thank you, Tom. As you all know, we've been laying the groundwork and building towards the development of a new experience for the past couple of years. To launch it successfully, we took a number of steps, including forming our product organization, upgrading our technology and then leveraging these to construct new digital capabilities and online consumer experience offerings. These investments are essential to our vision for the future. Spending for FY 2020 like in FY 2019 will represent a step up in investment.
So we believe we will require comps in the range of 5% to 8% to leverage SG and A similar to our thinking for FY 2019. We expect the amount of growth in this spending to slow in FY 2021 and taper after that. We will continue to look for opportunities to reduce waste and reprioritize spend, which contributed to our ability to leverage this Q4. Now, let me talk a little bit more about Atlanta and our omnichannel rollout. Please remember that Atlanta is one market and that we've only had a few months of experience to evaluate.
With that said, we are very pleased with our performance. In conjunction with the launch of Omnichannel, we introduced a number of other elements, including increased free transfers, a new website, a new advertising campaign and pricing tests. In the Q4, we achieved double digit growth in both comp sales and appraisal buys. This increase was beyond what we would have expected to gain. We are also pleased with the high conversion on home delivery sales.
Although it represents a very small percentage of overall sales at this point. In comparison to our stores in the Atlanta market, home delivery finance penetration is similar, while MaxCare penetration is a little lower. Keep in mind, I normally don't give market specific details nor do I plan to change this practice going forward, but given the interest in this new initiative, I wanted to give a little more context. We also know that we will be less efficient in some of our operations in the near term as we roll out the omnichannel experience. Some of these inefficiencies are by design and some are simply those related to starting up a new capability.
As a result, our sales in the Atlanta market are a little less profitable per unit compared with other markets at this point. We do believe that we will be able to improve on this as we continue to roll out omnichannel and as our consumer experience centers mature. We also believe this unique experience could be more efficient than our current model. We have a strong track record of operational excellence and we are confident in our ability to optimize. Most importantly, after seeing the results so far in Atlanta, we're even more confident that this is the right direction.
We believe that the omnichannel experience will be one of the key levers that helps drive comp sales and market share growth going forward. Now let me talk about the next steps. This fiscal year, we expect to open 3 CECs or customer experience centers across the U. S. Each will have an average staff of 300 associates and will serve multiple states.
Our experience in Atlanta suggests that we will be able to offset these additional associates with a reduction in sales consultants in omni channel stores, which will be realized through normal attrition. The first CEC will be in Atlanta and will open early in the second quarter as it supports the next phase of our omni rollout, which will include Florida stores. We also expect to open the second CEC site in Kansas City later in the Q2 and we are currently working on the 3rd site. As we previously said, we plan to bring the omnichannel experience to the majority of our customers by February 2020. As I've often talked to you about before, we are leveraging the strengths of the CarMax model that we've built over the last 25 years to deliver this new experience.
Strengths that include our skilled and knowledgeable associates, our national footprint and transportation infrastructure, our inventory scale and merchandising capabilities, our continued investment in technology and digital capabilities and our industry leading brand. These strengths are not only critical, but essential to delivering an omni experience, an experience that's tailored to every single customer, an experience that is unmatched and we believe will be the future of car buying. Now we'll be happy to take your questions.
Your first question comes from Sharon Zackfia from William Blair. Your line is open.
Hi, good morning.
Good morning, Sharon.
Thanks for the color on Atlanta. I guess just a multifaceted question to keep in line with Catherine's rules around Atlanta. Could you give us some color on what the comp trend was before omni channel? So it was helpful to hear about the double digits, but I don't know if Atlanta was like similar to the overall company prior to that, just so we can understand the amount of improvement you saw when omni channel rolled out? And then secondly, could you give a little bit more color around that discussion about Atlanta being a little bit less profitable on a per car basis?
Are you talking about just gross profit per car or all in on a per car basis? And ultimately, do you think omnichannel is similar to your current model in terms of profitability?
Sharon, you're really pushing Catherine's long
question. Well, she's retiring soon, so
Let me talk about the comp support. First of all, I'm not going to go into any real detail on the comps, but I'll give you a little color in that we have a control group obviously that we look at we're very pleased with the lift that we saw beyond the control group. As far as the profitability, when I talked about a little less profitable that is all in. So that's looking at SG and A, that's looking at margin. Truthfully, on the SG and A pressures, as I addressed in my opening script, we feel like we can at least offset those and we feel like this model could be more efficient.
And as far as any type of margin pressures, those are 2 different whether you roll Omni out and have decided to do something different margin, those aren't dependent 1 on or the other.
Yes. Thank you.
Sure.
Your next question comes from Brian Nagel from Oppenheimer. Your line is open.
Hi, good morning. Good morning, Brian. Nice quarter as always. I want to follow-up on Sharon's questions. I'll try to put mine all into one as well.
But with regard to Atlanta in that double digit comp, can you talk about what if all the facets, if you will, of the omnichannel effort in Atlanta, were you able to isolate what are the most important facets that's helping to drive that comp? And to what extent is that improvement in sales reflective of you speaking to a reach or speaking to or connecting with a potentially new customer for CarMax?
Yes. So Brian, the different facets when we implement for example advertising or we do something different on free transfers, we know kind of what we would expect to see. We have some expectations of what we would see. And when you look at each one of those individually added up, we saw a lift beyond what we would normally expect to see. So I think that's something when you look at the sum of the it's more than any individual component.
And what was the second part?
I'm sorry. With regard to is it a new customer? Is it just helping to drive that comp? Is it a customer that maybe CarMax in the past would not have connected with?
Yes. At this point, it's hard to tell. And the only thing I would say is we've seen some instances on home delivery that we probably are picking up some customers that maybe we wouldn't have because they physically couldn't have gotten into the store. But this experience is much more than just home delivery and I think it's a better experience for the customers.
Got it. Thanks.
Sure.
Your next question comes from the line of Craig Kennison from Baird. Your line is open.
Great. Thank you for taking my question. Bill, you had mentioned that you had a modest share decline on the year. That's a bit of a surprise given you opened 10% more stores. What do you think caused you to struggle early in the year?
And then what changed to reverse it?
Well, hey Craig, just to clarify, I talked about comp growth. Nationwide market share actually went up a little bit, but the comp markets went down a little bit. And as I said in my remarks, we saw those declines earlier in the year and then we started to saw a reversal towards the latter half. And I think we've been in an unusual pricing environment the whole quarter really starting off in the Q1 of this year and different organizations manage through that differently. Some may give up margin for sales for example and our pricing elasticity test wouldn't support that.
The other thing is I just think that it's been a competitive environment overall. Look, this is a good business to be in and I think the new cars are under a little bit of pressure. And so I think we have some new entrants. I think we have there's some more advertising. There's just more general noise overall in the marketplace.
So I think those are both contributing factors, especially early on as we saw different competitors pull different levers.
Thank you. Sure.
Your next question comes from the line of Rick Nelson from Stephens. Your line is open.
Thanks. So Bill, can you talk about these 3 CECs that you're going to roll out 300 associates per CUC. Are you going to be able to pull out a like number with associates out of the stores? Or how do you see that affecting expense?
Sure. We absolutely expect to pull out a like number, at least a like number. Again, what we've seen so far in Atlanta, if you think about the way that we staff a store currently, we staff it for what we call e office shifts, shifts where people take phone calls and follow-up on e leads. We no longer have to staff that. So we will get to the appropriate staffing levels in each store through normal attrition.
So we would expect to offset the store staffing with what we have in the CECs. And I think over time, this is a this will be a more efficient model because if you think about it, we have more than 7,000 sales associates across the country and we're currently asking them all to be part time e office sales associates. And some like it, some of them don't like it, some are good and some aren't so good. So I think by leveraging folks that are very skilled at this, this is all they focus on over time will give us even more leverage.
Great. Thanks and good luck. Thanks, Ray.
Your next question comes from Scot Ciccarelli from RBC Capital Markets. Your line is open.
Good morning. This is Beth Reed on for Scott. I wanted to ask about online marketplaces like CarGurus. I know you guys have kind of indicated that changing up your merchandising on these sites and better advertising your quality message could help improve the price perception because in many cases, it doesn't seem like you're getting the credit you should be getting for your reconditioning processes. So just wondering, 1, how big of an impact do you think this is having on your sales?
And then 2, any color you can give around specific initiatives if any and timeframe to improve your value ranking on these listing sites would be helpful. Thank you.
Sure, Beth. First of all, we feel good about our prices. That being said, we're always making sure that we've got a good price perception. We want to make sure that the customers understand the value of our cars. So there's really 4 focus areas that we're working on, one of which you alluded to.
But first, we're focused more on the quality message and transparency on our website and we're already doing this. As a matter of fact, we rolled out a new website nationwide at the latter part of the quarter. We're also focusing more on quality and transparency in our non website advertising. So TV, banners, retargeting, things like that. The third thing, which is what you alluded to is we're working with 3rd party listing sites to get the credit for our quality standards and the reconditioning that we do.
Most 3rd party websites, they don't factor any type of quality or condition into their algorithms or if they do, it's not on a consistent basis. So I feel really good about all those things. We're making great progress. And it may be a factor, but I just don't think it's to your other question, I just don't think it's had a major impact on overall comps.
Okay. Thank you very much.
Thank you.
Your next question comes from the line of Seth Basham from Wedbush Securities. Your line is open.
Thanks a lot and good morning. Good morning, Seth.
Bill, can
you just give us an update on what your internal research has shown in terms of the price perception out there of your cars relative to the industry? And then secondly, on your price test in Atlanta and otherwise, what are you learning from those? The first part of your question on just the research, what our research would tell you for example on like a car gurus. Our most recent research would tell you that the majority of our cars are either fair, good or great. And that's without any at this point without any credit for the quality.
Well, I'm sorry, what was the second part of your question? The pricing tests. Yes. The pricing tests that I noted that's part of our normal pricing test that we do all the time. Look, we can drive more sales absolutely just by lowering our prices.
But again, it's that balance of optimizing our total gross profit dollars, while also making
sure that we're competitive in the marketplace. And competitive in the
marketplace doesn't mean on marketplace doesn't mean on short time periods like quarter to quarter. We're looking for structural changes where we may not be competitive. We just haven't seen that. So we feel really good about where we are in price and what we're seeing on our pricing test as far as normal elasticity.
Thank you.
Your next question comes from the line of Armintas Sinkevicius from Morgan Stanley. Your line is open.
Great. Good morning. Thank you for taking the question. I was curious about how much you had spent on marketing in Atlanta and how you plan to how much you plan to spend going forward? And then just separately, any comments on the phasing of the launches for the omnichannel initiative through the course of this year?
Okay. So marketing in Atlanta. Atlanta is what we call high awareness market. If you think about what we spent in conjunction with this, it would have been normal to like a geo if we're going to be going into Atlanta, which is a step up obviously than what we were paying going forward. As far as what we'll spend in additional markets, every market is going to be a little bit different because it depends on awareness and what we were previously spending there.
As far as the phases of rollout, like I said, we will get the 2nd CEC opened early in the Q2. And in conjunction with that, we will start rolling out to additional stores with Florida stores being first. Beyond that, we'll update you next quarter the cadence of the other stores, the stores that we already did by the end of the quarter as well as the future stores.
Okay. And just so I'm clear, the marketing you've been spending in Atlanta, does that amount to essentially what you're planning to spend on a run rate basis or will that step up as you sort of work through maybe the various kinks with the website and the market etcetera?
Yes. No, I think you should think about it more holistically as far as how much we spend in advertising on a per unit basis. And if you look at it year over year, I would expect FY 2020 to be there may be a little bit of an increase in the per unit advertising expense overall, because we do want to support our omnichannel rollout. But so I would expect a little on a per unit basis going forward.
Got it. Thank you.
Your next question comes from the line of John Murphy from Bank of America. Your line is
open. Good morning, guys. Just wanted to touch on one stat, just make sure I had these numbers straight, Bill. I mean, I think you mentioned the 0 to 4 portion of your sales was down to 72% versus 76% last year and 77% in the 3rd quarter. I just want to make sure I have that right.
And if we think below that, sort of what the percentages are and really as you look at the market, I mean, as vehicle quality has improved so dramatically in the last decade, could you consider going down a little bit further in the age spectrum because the quality of the vehicle is going to be still really what you want to deliver to the customer is a nearly new used vehicle. And just really sort of tip of the iceberg might be much, much larger for you over time as you go down the age spectrum?
John, you do have those percentages right, the 72 versus the 76. And look, the beauty of this business model is we can sell what the customers are looking for. And this quarter, we saw consumers that were interested in a little bit older vehicle. I think part of that is because the pricing. Keep in mind, we're lapping.
If you look at year over year, this Q4 versus last year's Q4, we had the largest step up in mix adjusted acquisition price. It was more than $500 If you look at the quarter this year, we still had a little bit of an incremental bump up on that one that we had last year. So prices are still expensive. So I think what you're seeing is probably people just from an affordability standpoint moving down. But you're absolutely right.
We'll be able to secure vehicles and sell them if that's what consumers are looking for.
Billy, just wanted to follow-up. I mean, isn't the beauty of that that you might be able to have lower acquisition prices in the future with this high quality product and still have the same dollar grosses and have a much more capital efficient business model?
Well, if we continue to have older vehicles, our overall average selling price, you're absolutely right, would go down.
And grosses would stay about the same, right, just based on your focus?
Absolutely. Okay.
Thank you very much.
Thank you.
Your next question comes from the line of David Whiston from Morningstar. Your line is open.
Thanks. Good morning.
Good morning.
Just a
question with new vehicle sales coming down. Is that all positive for you right now? Is it greatly helping you due to more awfully supply and more budget conscious consumers you were just talking about? Or do you think also consumer confidence is down marginally versus a year ago? No, I think I mean, if I look at the new car, I think it's been a pretty flat year for overall new car sales.
I think we've proven that in years where it goes up a little bit, years where it goes down a little bit, we've been able to have success on both sides of that. And as far as I can tell consumer confidence is still very strong.
Okay. Thank you.
Your next question comes from Chris Bottiglieri from Wolfe Research. Your line is open.
Hi. Thanks for taking the question. Given the comparisons on a 2 year basis to Atlanta's comp performance outperformed the rest of the store base by a similar amount as it did on a 1 year basis. Then I guess, thinking through that, is there any reasons why investors shouldn't extrapolate Atlanta's comp trend to the rest of the store base given your intentions to roll it out to all stores this year? Thank you.
Yes, Chris, Atlanta is one market and every single market is going to perform differently. And the reason I say that is because we have experience in a lot of different markets. And if you just look at the core business, each market performs a little differently. So I don't think you can extrapolate what we see in this market versus what we're going to see in other markets, which is why I said, hey, remember this is only one market. And again, on the double digit comp increase, we feel really good about that.
We feel like it's a lift above what we expected when we also compared it to the control group. So we and it's not all due to omni as I had said earlier, there's a lot of different elements playing into that.
Got you. Okay. And then
just quickly if you're able to well, I'll hop back in whenever we catch this rule, I'll hop back in. Thanks.
Your next question comes from the line of Seth Sigman from Credit Suisse. Your line is open.
Thanks. Hey, guys. I wanted to follow-up on the expense growth. So the 5% to 8% comps you need to leverage SG and A, I guess you said that's similar to 2018. You also discussed being less efficient in the short term, right?
So how do I reconcile those 2? And if there are some levers that maybe limit the negative impact from the investments, can you just sort of help us understand that? Thanks.
Yes. I think, Seth, the guidance on the 5 to 8 was really to help clarify a little bit of what we are saying because we are saying high mid single digit. We put a little range on there. And I think we put the range on because it just somewhat depends on how much we get done and then also how much we can continue to offset through reprioritization and savings.
Okay. Thanks.
I'll hop back in. Well, I mean, maybe on the same point, if you
could give us a sense of
the timeline of the investments throughout the year to the extent you can, particularly with the CECs rolling out in the Q2? Just how do we think about the cadence of maybe expense growth throughout the year?
Yes. I'm not going to give any guidance on how I think it's we'll just have to wait and see. It's going to be distributed throughout the year. As I said, the CECs are going to be some additional expense. There are going to be some in the Q2.
You're picking up some there. So I think you got to think about it on the whole year because there could be a little timing from 1 quarter to the next quarter.
Okay. Thanks.
Okay.
Your next question comes from the line of Chris Botticelli from Wolfe Research. Your line is open.
Thanks for taking the question. So just a quick question.
Can you maybe just walk us through
what it takes to convert an omnichannel market? I think you're in 3 markets today. My guess is you'll probably plan to get to 100 to 200 markets by the end of the year in February. So maybe you could just walk us through kind of like what it takes to actually take your legacy store model and convert it to omnichannel? Like what are the technology steps, the training steps or whatever else it takes to convert the market?
It would be helpful. Thank you.
Okay. First of all, Chris, thanks for getting back in line for the second question. Listen, on the omni, there's 2 big things that have to be accomplished. I mean, we've been setting the groundwork, as I said in my opening remarks, from a technology standpoint that kind of thing. But in addition to that, we have to get our customer experience centers open, obviously that's a critical part of the whole omnichannel experience.
So that's one of the things that we have to continue to work through. We feel good about the plan. We feel very strong about our ability to get to what we've lined out there, which is by February of next year having this offer to the majority of our customers. The other thing is that there is this we've got 25,000 associates. And as Tom talked about earlier, they are the key differentiators for us.
So this is going to be obviously a big change for them. They're excited about it. And they have been super helpful as in helping us figure this out as we've rolled it out. What we have today is better than what we had in when we first rolled out Atlanta and that will continue to improve as we go forward. But we have to make sure they say they understand there's a lot of change management and what does it mean for them and how it's going impact them and give them the ability to adjust for the change.
So those are the big things in addition to a lot of the groundwork that we've been laying. And just so everybody's clear, this is an iterative process. This omnichannel experience is an experience that can meet every customer that's out there. It's not meant for one segment versus another segment. It's we should be able to serve every single customer and give them an unbelievable experience.
And that requires a lot of things that we already have. So for example, the importance of our store, I can't overstate how important is that we have a physical presence and that we continue to have a physical presence and increase that physical presence as we go forward. So we're leveraging a lot of things that we already have.
Your next question comes from Ali Faghari from Guggenheim. Your line is open.
Thanks. Good morning for taking my question. Just on the tax refund, you called it out as a headwind in the Q4. Based on your historical experience, do you expect to get some of those loss volumes back in the Q1 as those refund levels normalize?
Yes. So the way I think about that is the same way I think about weather. It's a timing and it generally will work itself back out. And as I look at February, I think probably by our best estimate, there was about 7 about a week that we didn't see of tax refund benefits, just because they were delayed in coming out really until the last part of the quarter.
There are no further questions at this time. I now turn the call back to Bill Nash.
Great. Thank you. Listen, thank you all for joining the call today. I really appreciate your support and your interest in CarMax. I also I've got to thank our more than 25,000 associates.
Tom's talked about this. I've talked about it. They are the true differentiator for CarMax. Our associates are the ones that are bringing this new customer experience to life. I want to thank you all for what you do every single day and we will talk again at the end of next quarter.
Thank you.
This concludes today's conference call. You may now disconnect.