CIRCUIT CITY STORES, INC. REPORTS FOURTH QUARTER
AND FISCAL YEAR 2003 SALES
Raises Earnings Expectations
Executive Officer Plans Retirement
Richmond, Va., March 6, 2003 - Circuit City Stores, Inc. (NYSE:CC) today
reported sales for the fourth quarter and the fiscal year ended February 28,
2003, and increased its fourth quarter earnings expectations.
For the fourth quarter ended February 28, 2003, total sales for Circuit City
Stores, Inc. decreased 5 percent to $3.20 billion from $3.36 billion in the same
period last year, with comparable store sales decreasing 6 percent. For the
fiscal year, total sales increased 5 percent to $9.96 billion from $9.52 billion
last year. Comparable store sales increased 4 percent for the fiscal year.
"Our fourth quarter sales reflect the soft economy and continued declines in
average retails across many product categories," said W. Alan McCollough,
chairman, president and chief executive officer of Circuit City Stores, Inc.
"For the quarter, continuing consumer interest in new technologies resulted in
solid sales gains in digital projection televisions, plasma and LCD televisions,
portable audio and mobile electronics," said McCollough. "Sales of DVD movies
and video game software remained strong throughout the quarter, reflecting a
number of hot title introductions. Sales of digital satellite systems and
wireless phones, which carry higher-than-average gross profit margins, declined
for the quarter, as did sales in the personal computer category.
"We believe that a number of factors influenced the February comparable store
sales, which declined 10 percent," said McCollough. "We saw no apparent
disruption in the sales pace immediately following implementation of the
compensation change, reinforcing our belief that this move was the right one for
our customers and our store operations. As the month progressed, we believe that
concerns over the economy and national security, as well as harsh weather in the
Eastern United States, particularly over Presidents' Day weekend, weighed on the
sales results. Nevertheless, the sales pace for the full month was consistent
with our performance at the end of January and the extended warranty sales pace
was in line with our expectations.
"We congratulate our store directors and sales associates for making the
transition to a single pay structure as seamless as possible for both our
customers and our company," said McCollough. "Our operations team did an
outstanding job planning for this change. We believe that our February results
illustrate that drivers for success are our state-of-the art training programs
and the personal commitment that our store associates make to customer service."
The percent of merchandise sales represented by each major product category for
the fourth quarter and the fiscal year was as follows:
Three Months Ended Fiscal Year Ended
February 28 February 28
--------------------------------- ---------------------------------
2003 2002 2003 2002
---- ---- ---- ----
Video........................... 41% 40% 40% 39%
Audio........................... 16 15 15 15
Information Technology.......... 28 32 32 34
Entertainment................... 15 13 13 12
---------------- ---------------- ---------------- ----------------
Total........................... 100% 100% 100% 100%
---------------- ---------------- ---------------- ----------------
Store Openings and Relocations
During the quarter, Circuit City relocated two Superstores in the St. Louis,
Mo., and Columbia, S.C., markets. For the full year, Circuit City opened eight
new Superstores and relocated 11 Superstores.
Fourth Quarter and Fiscal Year 2003 Earnings Expectations
"We now anticipate fourth quarter earnings from continuing operations will be in
the range of 33 cents per share to 36 cents per share, resulting in fiscal year
2003 earnings from continuing operations in the range of 17 cents per share to
20 cents per share," said McCollough. The fourth quarter estimated earnings per
share range assumes approximately 3 cents per share of one-time costs related to
the change in compensation structure and approximately 1 cent per share of
remodel and relocation expenses, including accelerated depreciation on assets
planned to be remodeled or relocated in fiscal 2004. The upward revision in the
company's fourth quarter earnings estimate reflects no sales disruption and
lower levels of severance and other one-time costs related to the change in
compensation structure as well as a higher anticipated contribution from the
finance operation, resulting primarily from a more favorable than anticipated
valuation of the interest-only strip. For the full year, we expect remodel and
relocation costs to total approximately 14 cents per share. On October 1, 2002,
Circuit City completed the separation of the CarMax auto superstore business
from the Circuit City consumer electronics business. As a result, results
attributed to CarMax for periods prior to the separation date are presented as
results from discontinued operations. The company's discontinued operations also
include the operating results and loss on disposal of Digital Video Express, a
business that ceased operations in June 1999.
Executive Management Change
McCollough also announced today that Michael T. Chalifoux, who has served as
Circuit City's executive vice president, chief financial officer and corporate
secretary and as a member of the company's board of directors, has expressed his
desire to retire. "Mike joined Circuit City 20 years ago as corporate
controller," said McCollough. "At that time, we were still known as Wards
Company, Inc. and had just passed $200 million in sales. During his long tenure,
Mike has overseen the significant growth and changes in our consumer electronics
retail business, the development of our finance operation and the creation and
eventual separation of the CarMax business. Some short-term personal health
issues have driven his desire to retire at this time, but he has agreed to stay
on until a replacement is in place and to assist with all necessary transitions.
We expect to complete the process, including the transition, by our annual
meeting in June. We want to express our appreciation to Mike for his long
service to the company and for agreeing to assist in the transition phase."
Earnings Release and Conference Call Information
Circuit City plans to release fourth quarter and fiscal 2003 earnings on April
2, 2003. The company will host a conference call for investors at 11:00 a.m. ET
on that date. Domestic investors may access the call at 1-800-299-0148
(passcode: Circuit City), and international investors should dial 1-617-801-9711
(passcode: Circuit City). A live Web cast of the call will be available on the
company's investor information home page at http://investor.circuitcity.com or
at www.streetevents.com.
A replay of the call will be available beginning at approximately 1:00 p.m. ET
on April 2 and will run through midnight, April 9, 2003. Domestic investors may
access the recording at 1-888-286-8010, and international investors should dial
1-617-801-6888. The access code for the replay is 6064766. A replay of the call
also will be available on the Circuit City investor information home page or at
www.streetevents.com.
About Circuit City
Circuit City is a leading national retailer of brand-name consumer electronics,
personal computers and entertainment software. With headquarters in Richmond,
Va., Circuit City Stores, Inc. operates 611 Circuit City Superstores and 15
mall-based Circuit City Express stores, giving it more locations in more markets
than any other consumer electronics specialty retailer. For more information,
access the company's Web site at www.circuitcity.com.
Forward-Looking Statements
This release contains forward-looking statements, which are subject to risks and
uncertainties. Additional discussion of factors that could cause actual results
to differ materially from management's projections, forecasts, estimates and
expectations is contained in the Circuit City Stores, Inc. Securities and
Exchange Commission filings.
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Contacts: Ann Collier, Vice President of Financial and Public Relations,(804)
527-4058 Celeste Gunter, Director of Investor Relations, (804) 418-8237