Circuit City Net In Red $12.5M During Fiscal Q2
By Jeff Malester -- TWICE, 9/24/2001
RICHMOND, VA. — Hard hit by industrywide weakness in PC sales and declines in sales of analog products and older technologies — caused in part by lower average retails — second-quarter business at the Circuit City Group, excluding CarMax earnings, produced a loss of $12.5 million. This compares with earnings of $43.2 million in the year-ago three months.
Comp-store sales in the Circuit City Group, as reported, dropped 21 percent in the second quarter, with comps continuing to be affected by the retailer's exit from the major appliance business last year. Excluding majaps, second-quarter comp-store sales dipped 9 percent.
Total sales for the group dropped 19 percent in the three months ending August 31, as reported, hitting $2.04 billion, compared with $2.51 billion in the same quarter in 2000.
"We remain dissatisfied in the overall sale performance of our Circuit City business, although we continue to produce strong sales growth in key product categories," said W. Alan McCollough, president/CEO.
"We have experienced extremely solid comp-store sales increases in digital and advanced technologies, such as digital televisions, and in the new and expanded categories, such as digital imaging, video games, video software and personal computer software, accessories and peripherals, added in the former appliance space."
Excluding the impact of its majaps exit, Circuit City registered a 24.4 percent gross profit margin in the second quarter, 30 basis points below the 24.7 percent recorded in the second quarter last year. Including majaps, last year's second-quarter gross margin was 23.3 percent.
"The DirecTV supply issues have since been resolved and both of these high-margin service businesses were performing well as the [second] quarter ended. Stronger sales of products such as digital televisions and weak sales in the low-margin personal computer category had positive impacts on the gross profit margin," he said.
"Although we believe we are making progress across a number of fronts, we remain conservative in our outlook for the balance of the year," continued McCollough. "While we believe that continued consumer interest in digital advances, combined with the introduction of new computing technologies and new gaming platforms, will spur sales in select categories, the uncertain economic and industry climate is likely to remain a factor in our overall performance."
For the six months, total sales for the Circuit City Group decreased 21 percent, to $3.92 billion, down from $4.96 billion in the year-ago six months.
The Circuit City business produced a loss of $22.1 million, excluding CarMax earnings, compared with earnings of $89.9 million in the fiscal first half of 2000.
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