CarMax Inc. reported quarterly earnings that soared past Wall Street’s estimates, boosting the auto retailer’s shares as it works to maintain profitability in the face of declining used-car prices and waning consumer demand.

Adjusted profit in the fiscal first quarter was $1.44 a share, the Richmond, Virginia-based company said Friday in a statement. The figure easily surpassed the 80-cent average of analysts’ estimates compiled by Bloomberg. Sales also beat expectations despite a 17% drop in the period.

“The company posted solid upside thanks to a combination of revenue outperformance (the decline in used and wholesale revenue wasn’t as large as feared) and cost controls,” said Adam Crisafulli, an analyst at Vital Knowledge, in a research note.

CarMax’s shares jumped 8.5% at 9:47 a.m. in New York, the biggest intraday gain since April 11.

Used-car dealers are attempting to navigate a turbulent market through cost cuts and prioritizing higher-margin sales. After a surge in demand early in the pandemic driven in part by tightness in new-vehicle inventories, used sales have seen a sharp slowdown, weighing on the likes of CarMax and rival Carvana Co. The industry has been further pressured by high interest rates, which are boosting monthly payments and squeezing consumers.

“There’s still an affordability issue out there,” CarMax Chief Executive Officer Bill Nash said on a call with analysts. “But I think we’ve kind of peaked on the rise in payments.”

Prices Down

Prices of pre-owned vehicles were down 7.6% in May from the year before, according to Manheim, the largest used-vehicle auction.

CarMax’s average retail sales price declined about $1,600 per unit, or 5.5%, in the quarter, which ended May 31. It bought 343,000 vehicles from consumers and dealers in the period, down 5.2% from a year earlier.

Net revenue was $7.69 billion in the period, above the $7.46 billion expected by analysts. Gross profit per retail used unit came to $2,361, in line with a year ago despite the challenging market.

“Our deliberate actions are driving improved trends in the business, despite the challenging macro environment,” Nash said in the statement.

(Updates with CEO comment in the fifth paragraph)