RICHMOND, Va. - Auto retailer CarMax Inc. said Friday its fiscal first-quarter profit fell 2.7 percent on a double-digit sales drop, a loss in its auto financing arm and charges related to loans, but still beat Wall Street expectations.

The Richmond-based company, which operates 100 stores, said it earned $28.7 million, or 13 cents per share, in the three months ended May 31, down from $29.6 million, or 13 cents per share, a year ago.

The latest results include a charge of 11 cents per share related to loans at its financing arm and a gain of 2 cents per share for a litigation settlement.

That left adjusted earnings at 22 cents a share - well above the 4 cents a share that analysts expected. The analyst estimates typically exclude one-time items.

Sales fell 17 percent to $1.83 billion from $2.21 billion a year ago but still beat analysts' estimates of $1.72 billion. Same-store sales, or sales at stores open at least a year, fell 18 percent during the quarter.

"We are pleased to report earnings similar to the prior year level, despite being in the midst of the most challenging economic and credit environments in our history," Chief Executive Tom Folliard said in a news release.

Used vehicle sales dropped 13 percent, while new vehicle sales fell 42 percent, the company said. The average selling price of its used vehicles declined 2.2 percent, while gross profit per vehicle increased 13.5 percent to $2,911 for the quarter.

The company's auto financing arm reported a loss of $21.6 million compared with a profit of $9.8 million in the year-ago period due in part to higher funding costs. Both periods also were impacted by one-time adjustments related to projected losses for defaulted loans, the company said. Adjustments for the first quarter totaled $40.4 million.

Volume of loans originated and sold by its financing arm dropped 27 percent from the year-ago period due to a decrease in sales and the company's decision to decrease the amount of in-house lending. Folliard said that decision did, however, contribute to a decline in sales.

CarMax also said it saw a 42 percent decline in its third-party finance fees, partially affected by a reduction in unit sales and a shift in providers.

Expenses for the first quarter fell 15.1 percent to $206.2 compared with the year-ago period due to efforts to curb store and corporate overhead costs.

A service of YellowBrix, Inc.