Circuit City's Comp Sales Stall; Earnings Warning Sounded

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Richmond, Va. - Circuit City said plummeting appliance sales caused its comp-store numbers to slump for the second quarter ended August 31.

The chain, which announced last month that it is abandoning that business, reported flat same-store sales for the period, while total sales rose 4 percent to $2.5 billion. Excluding appliances, comp-store revenue rose 6 percent, the company said.

Also crimping Circuit City's comps was a first-quarter store remodeling effort in Florida, the first test of a majap-free format. Excluding stores in that market, same-store store sales rose 1 percent in the second quarter.

According to president and CEO Alan McCollough, comp-store sales for majaps alone fell 23 percent for the quarter. Buoying the overall business, he said, was the home office category, particularly digital imaging technology; video, especially DVD and big screen TVs; digital wireless communications; and accessories. Indeed, home office represented nearly a third of Circuit City's sales mix for the quarter, up to 31 percent from 28 percent during the year-ago period, while TVs and VCRs/camcorders remained flat at 17 percent and 12 percent of total volume, respectively. Major appliances, by contrast, fell to 14 percent of the mix from 18 percent last summer.

McCollough noted that sharp majap markdowns associated with its departure from the category will likely impact second-quarter earnings, which are expected to be 2 cents per share lower than the company's July estimates. To date, 54 stores have removed their appliance departments, he said.

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