Richmond, Va. – Circuit City Stores posted higher net sales and net income for its second fiscal quarter that ended Aug. 31, led by flat panel TV, computers and service revenue.
During the second quarter net sales grew 11 percent to $2.84 billion, driven by a comparable store sales gain of 8.3 percent. Domestic segment Web-originated sales grew 74 percent over the prior year.
Net earnings from continuing operations during its second quarter net totaled $11.4 million compared with $3.9 million for the second quarter of fiscal 2006. The chain’s gross margin was flat compared with last year's result.
Phil Schoonover, chairman, president and CEO of Circuit City Stores, commented, “We are particularly pleased with our results, given the mixed macroeconomic signals and aggressive competitive environment during the quarter.”
Circuit City: Sales Of Flat Panels Easing
Richmond, Va. – Circuit City is still enjoying double digit growth in flat panel TV sales, but the gains are down from the triple-digit increases it has enjoyed for the past six consecutive quarters.
He noted that the chain’s emphasis in the past few quarters on HDTV and a renewed emphasis for the back-to-school season for PCs, laptops and digital cameras resulted in higher sales. Schoonover added, “We benefited from tighter integration among our store, Circuit City Direct, marketing, merchandising and inventory teams. These teams delivered improved multi-channel operational execution, better-coordinated promotions and compelling services offerings. These combined efforts drove strong sales growth in stake-in-the-ground categories during the back-to-school season.”
During its second half Circuit City will keep its “strategic focus” by “enhancing the in-store customer experience through the completion of more than 500 department resets using the lessons learned from our innovation tests; launching our services brand, firedog and ensuring a competitive assortment by adding new home entertainment brands and promotional offerings for our customers,” its chairman noted.
Ín the video category, Circuit City produced a low-double-digit comparable store sales increase in the second quarter. Total television comparable store sales increased by double digits, led by strong double-digit comparable store sales growth in flat panel displays. Comp store sales of digital imaging products and accessories increased by double digits, the chain said. But there were double-digit declines in comp store sales of camcorders and DVD hardware.
Circuit City produced a high- single-digit comp store sales increase in the second quarter in computers, driven by a single-digit comparable store sales increase in PC hardware, with comp store sales of notebooks increasing by double digits. Growth in the category was partially offset by single-digit decreases in comp store sales of printers and monitors and a double-digit decrease in comparable store sales of desktop computers. Comp store sales of PC services nearly doubled.
In the audio category, Circuit City produced a high-single-digit comparable store sales increase in the quarter, primarily from double-digit comp store sales growth in portable digital audio products and their accessories. Double-digit comp store sales growth in mobile audio products reflects growth in navigation products. Comp store sales growth in portable and mobile audio products was partially offset by a mid-single-digit comparable store sales decline in home audio products.
Domestic segment extended warranty net sales were $107.7 million in the second quarter, compared with $97.4 million in the same period last year.
Circuit City plans during the second half Circuit City plans to open or relocate 12 superstores in its fiscal third quarter, and 13 to 16 more superstores in its fiscal fourth quarter.
And the chain reported that it continued to repurchase stock, consistent with the board's $1.2 billion authorization. As of Aug. 31, the company had repurchased 52.1 million shares under this authorization at a cost of $799.7 million. Of this total, repurchases during the second quarter totaled 2.6 million shares at a cost of $67 million.