Richmond, Va. - Spurred by continued progress in the both the high-service and packaged goods areas, as well as strong sales growth in video and wireless communications, the Circuit City Group posted a 13 percent increase in fiscal first quarter sales.
Sales reached $2.1 billion, up from $1.9 billion in the year-ago period. Net earnings for the Circuit City Group in the first quarter, ended May 31, climbed to $17.5 million, up from $10.1 million in the same three months last year. These figures include earnings attributed to the reserved CarMax Group shares. Excluding earnings attributed to the CarMax Group, the Circuit City Group registered a loss of $1.3 million in the first quarter, compared to a loss of $9.6 million year over year.
Comp-store sales jumped 12 percent, but this figure benefited from the low numbers registered in the same quarter last year, when comps fell 25 percent.
'Our comparable store sales pace strengthened as the first quarter progressed, reflecting the growing consumer response to our customer service initiatives, aggressive promotions in traffic-building categories, and in entry-level products and a stronger inventory position in specific product categories,' said Alan McCollough, president/CEO.
Zeroing in on category growth for the three months, the Circuit City Group cited big-screen televisions, DVD players, digital satellite systems, DVD software and video game hardware. The retailer noted improving trends in information technology products, with PC sales growth driven by strong sales of notebook computers. It also emphasized a more competitive promotional stance, compared with the same quarter in 2001.
Circuit City's competitive product selection and pricing throughout the three months, however, helped drop its profit margin 50 basis points, to 24.2 percent, down from 24.7 percent last year. The retailer's response to more aggressive offers from competitors, and the resulting sales mix, also helped knock down the profit margin. 'We believe actions such as these, that bring customers into our stores to experience first-hand the improvements being made, will benefit our business over the long run,' said McCollough.
Circuit City said its expense ratio for the quarter dropped to 23.9 percent, down from 25.3 percent the previous year's first quarter, primarily as a result of the leverage achieved through increased sales. Factoring in the impact of remodeling and relocation costs, the expense ratio for the quarter hit 24.3 percent, compared with 25.5 percent in the first quarter of 2001.
'We intend to remain competitive and to balance our sales growth with promotional activities throughout the fiscal year,' said McCollough. 'We will stay focused on initiatives that we believe are the keys to providing an optimal shopping experience for our customers.