Profit Up 14% For Circuit City In Second Qtr.

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Circuit City had strong sales gains and double-digit increases in earnings despite a significant decline in average gross margins in the quarter and half to August 21.

For its fiscal second quarter the consumer electronics and appliance retailing powerhouse had a net of $41.2 million, up 14.4% from the same period last year, as sales rose 31.3% to $1.6 billion. First-half net was up 18.2% to $65.9 million on a 32% sales jump to $2.99 billion. Comparable-store sales were up 10% for both periods.

Chairman Richard Sharp said store expansion and growth in PC sales were "the primary contributors to our total sales growth." But the combination of price competition and the increase in PC and used car sales was responsible for trimming the chain's gross margin better than two points to 23% of sales in both periods. That, he said, was practically offset by two-point declines in Circuit City's expense ratio in those same periods.

During the quarter the chain opened 15 new superstores and replaced two, Sharp noted. They included market entries in Denver; Bloomington and Springfield, Ill.; Midland, College Station and Waco, Texas; Winchester, Va.; and Jacksonville, N.C.

Circuit City also opened its second CarMax used car lot in Atlanta and ended the half with 382 retail stores and four used car locations.◊[text]Profit Up 14% For Circuit City In Second Qtr.

Circuit City had strong sales gains and double-digit increases in earnings despite a significant decline in average gross margins in the quarter and half to August 21 (see related report, below left).

For its fiscal second quarter the consumer electronics and appliance retailing powerhouse had a net of $41.2 million, up 14.4% from the same period last year, as sales rose 31.3% to $1.6 billion. First-half net was up 18.2% to $65.9 million on a 32% sales jump to $2.99 billion. Comparable-store sales were up 10% for both periods.

Chairman Richard Sharp said store expansion and growth in PC sales were "the primary contributors to our total sales growth." But the combination of price competition and the increase in PC and used car sales was responsible for trimming the chain's gross margin better than two points to 23% of sales in both periods. That, he said, was practically offset by two-point declines in Circuit City's expense ratio in those same periods.

During the quarter the chain opened 15 new superstores and replaced two, Sharp noted. They included market entries in Denver; Bloomington and Springfield, Ill.; Midland, College Station and Waco, Texas; Winchester, Va.; and Jacksonville, N.C.

Circuit City also opened its second CarMax used car lot in Atlanta and ended the half with 382 retail stores and four used car locations.

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