Circuit City Stores, Inc. Reports Record May and First Quarter Sales
4 June 1999
Circuit City Stores, Inc. Reports Record May and First Quarter Sales, Earnings Above Expectations for the Circuit City Group and the CarMax Group
Circuit City to Become First National Retailer
To Sell Cable Labs Certified Modems
RICHMOND, Va., June 4 -- Circuit City Stores, Inc. today
reported May 1999 and first quarter sales for the company, the Circuit City
Group and the CarMax Group .
For the month, total sales for Circuit City Stores, Inc. rose 18 percent
to $977.2 million from $826.6 million in May 1998. For the first quarter
ended May 31, 1999, total sales for Circuit City Stores, Inc. rose 19 percent
to $2.69 billion from $2.27 billion in the first quarter of last year.
The Circuit City Group
For the month, total sales for the Circuit City Group were $791.4 million,
which represents a 13 percent increase from May 1998 sales of $699.5 million
and an 8 percent increase in comparable store sales. For the quarter ended
May 31, 1999, total sales for the Circuit City Group were $2.20 billion, which
represents a 15 percent increase from last year's first quarter sales of
$1.92 billion and a 9 percent increase in comparable store sales.
"Throughout the quarter, we produced strong sales growth across virtually
all major product categories, including consumer electronics, personal
computers and major appliances," said Richard L. Sharp, chairman and chief
executive officer of Circuit City Stores, Inc. "Attractive demand for
full-featured products and new technologies again contributed to the strength
in the consumer electronics categories."
Circuit City continued its expansion in May with the opening of six
Superstores. The company opened its second store in Clarksburg, W.Va., and
entered the markets of Cheyenne, Wyo.; Johnstown, Penn.; Biloxi, Miss.;
Terre Haute, Ind.; and Wheeling, W. Va.
"We anticipate that the strong first quarter sales performance will
produce earnings substantially ahead of analysts' expectations for the core
Circuit City business," said Sharp. "For the quarter, we expect the Circuit
City business to contribute approximately 39 cents per share to the Circuit
City Group's earnings, a 63 percent increase over the prior year."
The Circuit City Group's results also reflect the company's investment in
Digital Video Express and a retained interest in the CarMax Group. The
company expects that Digital Video Express will reduce the Group's first
quarter earnings by approximately 16 cents per share and that CarMax will
contribute approximately 2 cents per share to the Group's earnings. As a
result, first quarter earnings per share for the Circuit City Group are
expected to increase more than 90 percent.
Circuit City also announced that it will become the first national
retailer to sell Cable Labs Certified (CLC) modems that meet the DOCSIS
(Data Over Cable Service Interface Specification) standard. The modems will
be sold, in partnership with MediaOne, one of the world's largest broadband
communications companies, at Circuit City's three Richmond, Va., stores. The
modems provide consumers access to MediaOne Road Runner, a high-speed,
broadband Internet service. The DOCSIS modems are the first modems that are
transportable between cable service areas supported by the CLC industry-wide
standard. This new initiative follows a highly successful test of retail
cable modem sales initiated by Circuit City and MediaOne in the New England
market last fall.
"We are pleased that MediaOne has selected Circuit City to launch an
exciting new technology that provides substantial benefits to the consumer,"
said W. Alan McCollough, Circuit City's president and chief operating officer.
"Broadband Internet service enriches the Internet experience with speeds up to
50 times faster than standard Internet access, an 'always on' connection that
does not tie up your phone line, easy navigation, interactive games, expanded
content and other exciting features. Circuit City's ability to bring these
benefits to our customers reflects the commitment we have to sales training
and product presentation within our Superstores."
CarMax Group
For the month, total sales for the CarMax Group were $185.8 million, which
represents a 46 percent increase from May 1998 sales of $127.1 million and
comparable store sales that were unchanged from the prior year. For the
quarter ended May 31, 1999, total sales for the CarMax Group were
$485.9 million, which represents a 40 percent increase from last year's first
quarter sales of $346.4 million and a 3 percent decline in comparable store
sales.
"During May, the improved comparable store sales pace was largely driven
by better used-car sales across all markets," said Sharp. "The comparable
store performance also continues to reflect CarMax's strong new-car sales."
CarMax also continues to make progress in its new-car franchise
acquisition program. In mid-May, CarMax acquired Hilltop Chrysler-Plymouth,
Inc. and the Jeep franchise rights of Red Bird Jeep-Eagle in the
Dallas/Ft. Worth market. CarMax has combined the franchises into a single
CarMax Chrysler-Plymouth-Jeep store that also is the second Dallas location to
operate as a used-vehicle satellite store.
"We are especially pleased that CarMax also will exceed analysts'
expectations, returning to a profit position for the first quarter," said
Sharp. "We expect that improved gross margins and reductions in the expense
ratio from sales leverage and expense control will contribute to first quarter
earnings per share of 3 cents for the CarMax Group. We believe that the first
quarter performance is the first step towards improving the results for the
fiscal year to the break even or modest loss range."
Circuit City is a leading national retailer of brand-name consumer
electronics, personal computers, major appliances and entertainment software.
CarMax is the nation's leading specialty retailer of used cars and a rapidly
growing new-car retailer. With headquarters in Richmond, Va., Circuit City
Stores, Inc. operated at month-end 546 Circuit City Superstores, two consumer
electronics-only stores, 46 mall-based Circuit City Express stores and
35 CarMax locations, including 30 used-car superstores and 20 new-car
franchises.
This release contains forward-looking statements, which are subject to
risks and uncertainties, including, but not limited to, risks associated with
the development of new business concepts and risks associated with year 2000
issues. Additional discussion of factors that could cause actual results to
differ materially from management's projections, forecasts, estimates and
expectations is contained in the company's SEC filings.