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In addition, increase in sales of luxury vehicles and a rebound in sales of SUVs also contributed to the higher sales. Comparable store used unit sales for the quarter increased 13%, helped by strong store and Internet traffic. Buoyed by the third quarter results, the company raised its earnings outlook for fiscal year 2007.

For the third quarter, the Richmond, Virginia-based company's net income rose to $45.42 million or $0.42 per share from $22.

93 million or $0.22 per share in the year-ago quarter. On average, eleven analysts polled by First Call/Thomson Financial estimated the company to earn $0.

25 per share for the quarter. Net income for both the quarters includes share-based compensation of $0.03 per share on adoption of SFAS No.

123R. Net income for the year-ago quarter includes a benefit of $0.03 per share from favorable CarMax Auto Finance items.

Sales surged 24% to $1.77 billion from $1.42 billion in the similar quarter of last year.

Comparable store used unit sales rose 13% for the quarter. Wall Street analysts estimated revenues of $1.63 billion for the quarter.

Commenting on the results, Tom Folliard, president and chief executive officer, CarMax said, "We are very pleased to announce stronger-than-anticipated third quarter results. Similar to the first half of the year, we experienced widespread strength as reflected in our retail and wholesale sales and profit margins, CAF's performance, and the overhead leverage achieved." Used vehicle sales climbed 26.

7% to $1.38 billion from $1.09 billion in the previous-year quarter.

Wholesale vehicle sales surged 29.9% to $226.36 million from $174.

24 million in the last-year quarter on strong growth in wholesale units. The company attributed the increase in wholesale units to growth in its store base and an increase in appraisal traffic. Other sales and revenues were recorded at $54.

29 million, an increase of 10% from $49.35 million in the year-ago quarter. However, new vehicle sales declined 3% to $109.

94 million from $113.30 million in the prior-year quarter. The company said that sales in the quarter were positively impacted by strong store and Internet traffic as well as continued excellent execution by its store teams.

Further, the company noted that increased Internet visibility from improvements in carmax.com and expansion of Internet classified advertising also positively impacted sales in the quarter. A rebound in sales of SUVs and trucks, as well as increase in sales of luxury vehicles also contributed to the sales growth in the quarter.

The company noted that its margins were seasonally weakest in the third quarter on account of the effects of the model year changeover period and slowing customer traffic in the fall. Gross profit for the quarter increased to $228.61 million from $177.

17 million in the prior-year quarter. Gross profit per unit increased to $2,736 from $2,483 a year ago. The company noted that its used vehicle profits benefited from steady, consistent sales performance and added that it achieved a modest improvement in its wholesale gross profit per unit despite anticipating a decline from the prior year on account of Hurricane Katrina.

CarMax Auto Finance income increased to $31.97 million from $27.97 million in the last-year quarter.

The year-ago quarter's income included $6.1 million or $0.03 per share net of taxes of favorable items.

The company pointed out that CAF benefited from strong sales performance, an increase in the average amount financed, and an improvement in the gain on loans originated and sold. Operating profit for the quarter increased to $73.3 million from $37.

8 million in the previous-year quarter. For the nine months, the company's net income increased to $156.46 million or $1.

45 per share from $97.55 million or $0.92 per share in the year-ago period.

Net sales and operating revenues increased 20.4% to $5.58 billion from $4.

64 billion in the previous-year period. Looking ahead to fiscal year 2007, the company said that it now expects earnings in the range of $1.75-$1.

85 per share, compared to the prior forecast in the range of $1.55-$1.65 per share.

The forecast includes an estimated $0.19-$0.20 per share of share-based compensation and $0.

07 per share of favorable CAF items. Analysts estimate earnings of $1.64 per share for the year.

The company said that it expects to open 13 used car superstores in fiscal year 2008. Among the company's peers, Fort Lauderdale, Florida-based AutoNation Inc. ( | | | ), reported a decline in third-quarter net income on a marginal fall in revenues.

Net income for the quarter declined to $81.8 million or $0.38 per share from $129.

3 million or $0.48 (per share in the previous-year quarter. Quarterly revenues declined to $4.

96 billion from $5.07 billion in the prior-year quarter. Another company in the industry, Bloomfield Hills, Michigan-based United Auto Group Inc.

(UAG), reported an increase in third-quarter net income to $33.87 million or $0.36 per share from $32.

76 million or $0.35 per share in the last-year quarter. Revenues for the quarter increased 15.

2% to $3.08 billion from $2.68 billion in the year-ago quarter.

In Wednesday's regular trading session, KMX is currently trading at $54.52, up $5.89 or 12.

11% from Tuesday's close.