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 RICHMOND, Va., Dec. 13 /PRNewswire/ -- Circuit City Stores, Inc. (NYSE: CC), today reported net earnings for the third quarter and nine months ended Nov. 30, 1993, and an accelerated expansion program that will place the company in most major U.S. markets within three years.
 Net earnings for the third quarter were $19.5 million, a 17 percent increase from $16.6 million in the same period last year. Net earnings per share increased 18 percent to 20 cents from 17 cents. Total sales rose 26 percent for the quarter to $1.02 billion from $805.4 million in the same period last year. Comparable store sales rose 5 percent.
 Net earnings for the nine months were $64.7 million, a 31 percent increase from $49.5 million in the same period last year. Net earnings per share rose 29 percent to 66 cents from 51 cents. Total sales rose 25 percent in the nine-month period, to $2.72 billion from $2.17 billion in the first nine months of last year. Comparable store sales rose 7 percent.
 "Our sales for the quarter and year-to-date reflect the strong market shares held by our existing stores and the continued geographic expansion of the Circuit City Superstore," said Richard L. Sharp, Circuit City's president and chief executive officer. "During the quarter we opened 26 stores, including five Superstores in the Boston market and 14 in the Chicago metropolitan area. We now operate 14 Superstores in Boston and 18 in Chicago. Additional stores are planned for both markets in the coming fiscal year."
 The company also added two Superstores in San Francisco and one each in San Diego and Los Angeles. In the Richmond, Va., market, the company replaced an older Circuit City Superstore with a new Superstore. During the quarter, Circuit City also introduced a new prototype designed to serve smaller trade areas. The first two of these stores are located in Harrisonburg and Fredericksburg, Va. They are approximately 15,000 square feet in size and carry consumer electronics, major appliances and home office products.
 "The third quarter and nine-month results reflect an increasingly competitive retail climate that includes discount merchants, warehouse clubs and other specialty competitors," Sharp said. "Gross profit margins for the quarter were 25.8 percent compared with 27.5 percent in the same period last year. For the nine months, the gross profit margin was 26.4 percent this year vs. 27.8 percent last year. These margins also reflect a higher percentage of personal computers in our sales mix.
 "Circuit City has successfully offset a portion of the margin pressure with improvements in the expense ratio," Sharp said. "Selling, general and administrative expenses were 22.6 percent in this year's third quarter vs. 24.0 percent in the same period last year. For the nine-month period, the ratio was 22.6 percent this year compared with 24.1 percent last year. These lower ratios reflect greater operating efficiency in our stores, more efficient advertising programs and a contribution from our private-label credit card program."
 The third quarter net profit margin was 1.9 percent this year vs. 2.1 percent last year. The lower margin reflects the gross margin and expense ratio changes as well as an increase in the effective tax rate to 37.5 percent from 37.0 percent. For the nine months, the net profit margin rose to 2.4 percent from 2.3 percent.
 Sharp also announced that Circuit City's board of directors has approved an accelerated three-year expansion program of approximately 180 Superstores and 20 stores for smaller trade areas. "This expansion program will place Circuit City in all major metropolitan markets in the U.S., with the exception of New York, and will enhance our leadership position," Sharp said. "We will initiate this program next year as we open approximately 60 Superstores, including entries into the following major markets: Minneapolis, Kansas City, Seattle, Portland, New Orleans and Little Rock. We also will open our first Superstores in Lubbock, El Paso and Amarillo, Texas; Lafayette, La.; Chico, Calif.; and Columbia, Mo. In addition, next year's expansion program includes a number of openings in existing markets and three stores in smaller trade areas."
 The company also announced that it is introducing two new third- party extended service products. In November, the company began selling in most markets a four-year contract that provides in-home service for personal computer products. Service under this program will be provided by the General Electric Company. The second program offers contracts backed by insurance from Virginia Surety Company, Inc., a subsidiary of AON Corporation. Virginia Surety carries an A. M. Best Company rating of superior (A+). This program covers consumer electronics and major appliances and will gradually be introduced in highly competitive markets. "Both of these program reinforce the superior quality and financial security of Circuit City's warranty options. They further differentiate our products from free or low-cost competitor warranties, which may carry a higher fulfillment risk for the consumer.
 "Our more aggressive expansion program and the enhanced warranty products reaffirm Circuit City's commitment to attaining market share leadership by offering both competitive prices and exceptional customer service," Sharp said. "We believe that this strategy will continue to produce the highest possible returns for our shareholders. We are committed to maintaining our positions of market and industry leadership and will respond aggressively to market share challenges in both new and existing markets."
 Circuit City Stores, Inc., is the nation's largest specialty retailer of brand-name consumer electronics and major appliances. With headquarters in Richmond, it operates 251 Circuit City Superstores, two stores in smaller trade areas, seven consumer electronics-only Circuit City stores and 37 smaller, mall-based stores in the eastern, midwestern and western United States.
 (Amounts in thousands except per share data)
 Three Months Nine Months
 1993 1992 1993 1992
 OPERATING REVENUES $1,018,051 $ 805,426 $2,723,679 $2,171,517
 Cost of Sales,
 Buying and
 Warehousing 755,473 584,20 2,005,271 1,567,629
 GROSS PROFIT 262,578 221,225 718,408 603,888
 Selling, General and
 Expenses 230,492 193,401 615,638 522,765
 Interest Expense 926 1,424 2,294 2,603
 INCOME TAXES 31,160 26,400 100,476 78,520
 Provision for
 Income Taxes 11,700 9,768 35,819 29,054
 NET EARNINGS $ 19,460 $ 16,632 $ 64,657 $ 49,466
 Net earnings
 per share $ 0.20 $ 0.17 $ 0.66 $ 0.51
 Weighted Average
 Common Shares and
 Common Share
 Equivalents $ 97,452 $ 96,679 $ 97,522 $ 96,578
 -0- 12/13/93
 /CONTACT: Ann M. Collier of Circuit City Stores, 804-527-4058/

CO: Circuit City Stores, Inc. ST: Virginia IN: REA SU: ERN

DC-KD -- DC007 -- 3030 12/13/93 09:05 EST
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Publication:PR Newswire
Date:Dec 13, 1993

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