On October 24, 2008, the Court granted plaintiff Peter Rangos' Motion for Appointment as Lead Plaintiff and Approval of Lead Plaintiff’s Selection of Lead and Liaison Counsel. According to the Order, Coughlin Stoia Geller Rudman & Robbins LLP is approved as Lead Counsel and Craig C. Reilly is approved as Liaison Counsel for the class. On November 24, 2008, Lead Plaintiff Peter Rangos, pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i), filed a notice of the voluntary dismissal of the action without prejudice.
The complaint charges CarMax and certain of its officers and directors with violations of the Securities Exchange Act of 1934. CarMax is a nationwide retailer of new and used automotive vehicles. CarMax also provides customers with a full range of related products and services, including the financing of vehicle purchases through
CarMax Auto Finance, the Company's own finance operation, and third-party financing providers; the sale of extended service plans and accessories; the appraisal and purchase of vehicles directly from consumers; and vehicle repair service.
The complaint alleges that, during the Class Period, CarMax was not meeting internal sales targets and was facing a 55% shortfall in its net income for first quarter of fiscal year 2009, later prompting the Company to suspend its financial guidance for the rest of fiscal 2009. According to the complaint, CarMax publicly issued materially false and misleading statements and failed to disclose: (i) that
CarMax was not positioned to meet its sales targets or earnings objectives for fiscal 2009; (ii) that the Company had completed a refinancing of its warehouse facility which had materially increased the Company's funding costs; and (iii) as a result of the foregoing, defendants had no reasonable basis for their revenues and earnings
guidance for fiscal 2009.
On June 18, 2008, the Company issued a press release announcing its financial results for the first quarter of fiscal 2009, the period ended May 31, 2008. The Company also announced that it was suspending its financial guidance for the rest of fiscal 2009. Upon this news, shares of the Company's stock fell $2 per share, or approximately 11%, to close at $16.34 per share, on heavy trading volume.