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Circuit City Q4 Sales, Net Climb

4/02/2002 09:56:00 AM Eastern

Richmond, Va. - Solid sales growth in big-screen and digital televisions, digital satellite systems and wireless phones helped boost fourth-quarter sales and earnings at Circuit City Group.

Sales in the three months ended Feb. 28 increased 7 percent, hitting $3.4 billion, up from $3.2 billion in the year-ago fourth quarter. Comp-store sales climbed 6 percent in the same period.

Fourth quarter net for the Circuit City Group jumped 51 percent, reaching $152.7 million, compared with $101.2 million in the same three months the previous year.

'During the first half, we laid the groundwork for our second-half improvement,' said Alan McCollough, president/CEO of Circuit City Stores. This included 'focused initiatives to increase our traffic through more effective marketing and increase our conversion rate with better customer service and merchandising,' he said.

Healthy sales of digital cameras, video games and DVD and PC software were offset during the first half by a slowing economy, industry-wide weakness in PC sales, declining average retails for many products and the absence of majap business.

First-half doldrums contributed to an 8 percent decline in Circuit City Group sales for the 12 months, down to $9.6 billion, from $10.5 billion the previous year. Full-year net climbed about 28 percent, to $190.8 million, up from $149.2 million.

Circuit City Group attributes its 70 basis point increase in gross profit margin during its fiscal year - from 23.6 percent in 2001 to 24.3 percent in 2002 - to sales growth in new and better-featured technologies, and weak sales in lower margin categories, such as PCs. In the fourth quarter gross profit margin slipped 30 basis points, to 24.1 percent, compared with the fourth quarter a year earlier.

Looking ahead, McCollough said the Circuit City Group expects to achieve comp-store sales growth in the mid-single digits for fiscal 2003. 'Given the softer comparisons, we expect comparable store sales growth in the high-single digits for the second half. With limited geographic expansion, we anticipate that total sales growth will only slightly exceed comparable store sales growth throughout the year.'

Circuit City Group is sticking with an earlier announcement to open about 10 stores, remodel about 300 locations and relocate about 10 stores during the current fiscal year.

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