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Circuit City Posts Profit, Double-Digit Sales Gain

RICHMOND, VA. – Circuit City reported a $6.4 million profit in its fiscal first quarter versus a year-ago loss of $13.1 million.

For the quarter ended May 31 net sales for the chain were $2.6 billion versus the year-ago performance of $2.2 billion, a 17.5 percent increase. Domestic sales were up the same percentage, from $2.1 billion last year to $2.5 billion for this year’s first quarter.

Comp store sales were up 14.6 percent overall and 15.3 percent domestically, while international comp store sales were only up 2.4 percent.

Consolidated gross profit was 24.5 percent, almost flat with the year-ago 25 percent. Domestic segment gross profit margin decreased 32 basis points due to increased promotional financing costs largely related to longer financing terms and higher interest rates, Circuit City reported.

During the first quarter domestic segment Web-originated sales grew 85 percent, and domestic segment services grew 175 percent over the prior year.

Phil Schoonover, president/CEO of Circuit City, said an “improved in-store customer experience contributed to increases in average ticket and conversion rate. Our multi-channel marketing efforts drove improved traffic trends in all channels, and we saw an increase in Web-originated sales picked up in our stores.”

In the video category Circuit City had a double-digit comp store sales increase for the first quarter. Total television comp store sales increased in the double-digits, led by triple-digit growth in flat panel displays, the chain reported. Comp store sales of digital imaging products and accessories increased by double digits. Growth in the category was partially offset by a single-digit decline in comp store sales of camcorders and a double-digit decline in comp store sales of DVD hardware.

In the information technology category the chain had low double-digit comp store sales in the first quarter led by PC hardware, notebook computer and printer sales. Audio produced double-digit sales increases led by portable digital audio products and accessories. Comp store sales increases in portable and mobile audio products were partially offset by mid-single-digit declines in home audio.

Domestic extended warranty net sales were $92.3 million, or 3.7 percent of domestic sales, in the first quarter, compared to $85.1, or 4 percent of domestic sales, for the same time last year.

During the first quarter domestically the chain relocated two and opened three new superstores. One of the relocated superstores replaced a store that was closed in February 2006. The company opened two outlet stores and closed two mall stores. The company also completed one remodel, which consisted of rebuilding a storm-damaged store.

In the second quarter Circuit City plans to open four more superstores, followed by seven in the third quarter. Five superstores will also be relocated during the third quarter, the chain said.