RICHMOND, VA. -Hit hard by major appliance markdowns associated with its exit from the majap business, remodeling costs and a majap-related sales disruption, the Circuit City Group reported a loss from continuing operations of $70.1 million in its fiscal third quarter. This compares with earnings from continuing operations of $54.7 million in the fiscal third quarter of last year.
The earnings numbers, which ex-clude its interest in CarMax, are consistent with previously announced expectations for the Circuit City Group.
Total sales for the Circuit City Group dropped 7 percent in the fiscal third quarter ended Nov. 30, coming in at $2.33 billion, compared with $2.50 billion in the same quarter in 1999. Comp-store sales declined 10 percent in the third quarter.
Excluding stores in central and south Florida, where remodels were completed late in the third quarter, Circuit City Group comp-store sales dropped 9 percent in the third quarter. Excluding majaps, from which the company completed its exit in the third quarter, comp-store sales rose 3 percent in the three months.
"Although sales for our Circuit City stores were below expectations, we were pleased that better-featured products, new technologies and the new categories-which were added to the stores across the course of the quarter-grew rapidly," said president/CEO Alan McCollough.
Excluding majaps, gross profit margin at Circuit City was 24.1 percent in the third quarter, 180 basis points lower than the 25.9 percent racked up in the same three months last year.
Including majaps, the gross profit margin for the third quarter dipped to 22 percent, 280 basis points below the 24.8 percent recorded in the year-ago third quarter.
"The third-quarter gross profit margin, excluding appliances, was significantly lower than we had anticipated," said McCollough.
Circuit City's expense ratio of 26.7 percent in the third quarter, compared with 21.1 percent in the year-ago period, includes $33.6 million in remodeling costs for the Florida stores and $30 million in costs related to the retailer's partial remodels. Excluding these costs, this year's expense ratio for the third quarter would have been 24 percent.
For the nine months, total sales for the Circuit City Group climbed 2 percent to $7.28 billion, compared with $7.12 billion in the first nine months of 1999. Comp-store sales declined 1 percent.
Excluding stores in central and south Florida, comp-store sales were unchanged for the nine months. Excluding majaps, comp-store sales rose 6 percent for the nine months.
Excluding the interest in CarMax, earning from continuing operations for the Circuit City Group were $19.9 million in the first nine months, compared with $165.3 million in the first nine months of last year.
Gross profit margin for the nine months was 24 percent, 80 basis points below the 24.8 percent recorded in the same period last year.
For nine months, gross profit margin excluding appliances was 24.8 percent, 60 basis points below the 25.4 percent reported in the year-ago nine months.
The expense ratio for the year to date, which includes one-time appliance exit costs, was 22.7 percent, compared with 20.9 percent in the year-ago nine months, a difference of 180 basis points.