RICHMOND, Va. -- Driven by strong sales of personal computers, entertainment software, big-screen television and new technologies that include DVD players and digital cameras, Circuit City Stores Inc. reported that total sales for the Circuit City Group rose 11 percent in the first fiscal quarter ended May 31
Sales for the group reached $2.45 billion, compared to $2.20 billion in the same quarter last year, with comparative store sales gaining 7 percent.
Earnings from continuing operations for the Circuit City Group, which includes the inter-group's 74.7 percent retained interest in the CarMax used car business, rose 38 percent to $57.1 million for the first fiscal quarter, compared to $41.4 percent for the same three months in 1999.
Separately, excluding the interest in CarMax, the company reported earnings from continuing operations for its core Circuit City stores climbed 19 percent to $46.7 million, compared to $39.3 million in the same period last year. Earnings reflect a reversal of the company's loss in the same quarter last year due to the discontinuation of its Digital Video Express business in its Circuit City stores.
Net earnings related to Circuit City Group's inter-group interest in CarMax increased net earnings for the Circuit City Group by $10.4 million in the first quarter, compared to $2.1 million in the first quarter of the last fiscal year.
Total sales for the first quarter shot up 14 percent to $3.07 billion, compared to $2.69 billion during the first quarter of last year. Earning from continuing operations rose 44 percent to $60.7 million, from $42 million in the comparable three months in 1999. Results include total sales and earnings for Circuit City stores and CarMax.
"Total and comparable store sales growth for our Circuit City store business exceeded out expectations in the first quarter," said W. Alan McCollough, president and chief executive officer. "The first-quarter merchandise mix resulted in a gross profit margin of 24.4 percent this year, compared with 24.5 percent in the same period last year," said McCollough.
"The strong comparable store sales growth generated an improved expense ratio of 21.2 percent, compared with 21.5 percent in the same period last year. These trends produced a better pretax profit margin for the Circuit city business of 3.1 percent vs. 2.9 percent in the same period last year," McCollough said.
The company also announced that it no longer will release monthly sales for its groups or the combined company. "We are one of only a few hard goods retailers that have continued to release monthly sales," said Richard L. Sharp, chairman of Circuit City Stores Inc. "We have found that these releases focus attention on short-term sales variations rather than the overall business trends that are critical to management decisions and to quarterly and longer term earnings results. Therefore, going forward, we will release sales only at the end of each quarter."
Early in the quarter, Circuit City opened two superstores, including its 32nd unit in the New York metropolitan area and its 5th in the Kansas City, Kan. market.
During the quarter Circuit City also began to roll out a number of new technology displays designed to help consumers learn about the latest capabilities available in consumer electronics, including digital memory devices, wireless communications, Internet access and new digital video and digital audio products.
Circuit City also said it is in the process of redesigning its store format to add more space for consumer electronics and personal computer products and expand its selection of self-service items. The company plans to open the first redesigned store at the end of the second fiscal quarter.