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Circuit City Sales Up 10%

9/06/2002 08:46:00 AM Eastern

Richmond, Va. - Bucking the recent spate of sales and earnings alarms from publicly held CE chains, Circuit City reported today that its total sales and same store revenue rose 10 percent for the second quarter ended Aug. 31.

'We are extremely pleased with our comparable store sales growth for the quarter,' said president/CEO Alan McCollough, who cited a 'broad range of initiatives' for the sales spurt, including improved customer service.

But also buoying the specialty chain's results were easy comparisons - comp sales plummeted 21 percent during the year-ago quarter - and a plethora of promotional activity. As McCollough noted, Circuit City 'saw significant sales gains in more promotional traffic-driving categories such as entertainment and commodity electronics.'

What's more, the company is prepared to maintain its promotional tack through the holiday selling season. 'It is our intention to remain appropriately competitive throughout this fiscal year,' McCollough said. 'We are focused on driving traffic in our stores as well as strengthening our market share. We expect that comparable store sales growth and gross profit margins will vary based on market conditions as we attempt to strike a balance between the impact of the promotional activity on sales and margins.'

Consequently, second quarter earnings, which will be announced Sept. 18, are expected to range from breakeven to a slight profit, McCollough said.

Besides commodity items, Circuit City also enjoyed second quarter sales gains in DTVs and computer products. Indeed, fueled in part by what McCollough described as 'healthy back-to-school traffic,' the retailer reported increased sales of notebook computers, printers, monitors, PDAs and computer accessories.

Elsewhere, the company reported that it had upgraded the video departments in more than 225 of some 300 stores targeted for remodeling, and that it has completed full-store lighting upgrades in nearly all of the 300 units.

In addition, the company said it expects to complete the previously announced separation of its CarMax used car unit from its CE retailing business by Oct. 1, 2002.

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