All Circuits Are Not Busy

Electronics retailer announces drop in 4Q sales, but yearly sales were up
Posted April 3, 2003

Circuit City Stores Inc. (Richmond, Va.) reported a 5 percent decrease in total sales for the fourth quarter ended Feb. 28, 2003. Same-store sales decreased 6 percent.

For fiscal 2002, total sales increased 5 percent and same-store sales increased 4 percent.

The company noted that remodel and relocation expenses totaled $2.7 million in the quarter, including costs related to the relocation of two superstores. For the full year, remodel and relocation expenses totaled $47.9 million, and included the costs of completing approximately 300 video department remodels and full-store lighting upgrades and the relocation of 11 superstores. The results also reflected costs associated with the exit from the appliance business.

"Our fiscal 2003 sales reflect the benefits of traffic-driving initiatives and strategic merchandising shifts," said chairman, president and ceo W. Alan McCollough. "However, we faced declining average retails across many product categories throughout the year and, in the fourth quarter, significantly tougher comparisons against the previous year's results as well as lingering economic and national security concerns.

"Sales of big-screen televisions, particularly digital televisions, were strong across the course of the year," he continued, "re-emphasizing the importance of new video display technologies. Sales of entertainment software, particularly DVD movies and video games, also were consistently strong throughout the year. We also saw strong fourth quarter sales growth in portable audio products and mobile electronics. Sales of digital satellite systems and wireless phones, which carry higher-than-average gross profit margins, declined in the second half of the year. Personal computer sales improvements were driven in the first half of the year by strong sales of notebook computers and a more competitive promotional stance compared with fiscal 2002."

McCollough also said that "we remain focused on . . . creating contemporary store environments that enable our customers to both learn more about complex and newer technologies and browse for commodity and self-serve merchandise. Improving our store base as well as simplifying all aspects of our business will remain top priorities as we progress in fiscal 2004. We anticipate that the changes we have made in the areas of store design, merchandising, marketing and our sales force initiatives will drive traffic in the upcoming year."