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News and Information Article
RICHMOND, Va., Jan. 6 /-FirstCall/ -- Circuit City Stores, Inc.
(NYSE: CC) today announced record sales for the month ended December 31, 2005.
Total sales increased 12.1 percent to $1.98 billion from $1.77 billion in the
month ended December 31, 2004, with a consolidated comparable store sales
increase of 10.8 percent led by an 11.1 percent increase in domestic segment
comparable store sales.
Month Ended Comparable
December 31 Year-Over- Store Sales
(Dollar amounts in billions) 2005 2004 Year Change Change(a)
Domestic segment sales $1.88 $1.67 12.1% 11.1%
International segment sales 0.11 0.09 12.6% 4.2%
Net sales and operating revenues $1.98 $1.77 12.1% 10.8%
(a) A stores sales are included in comparable store sales after the store
has been open for a full 12 months. Comparable store sales include Web-
originated sales and sales from relocated stores. International segment sales
are included in the companys comparable store sales and are calculated in
local currency. The calculation of consolidated comparable store sales
excludes the impact of fluctuations in foreign currency exchange rates.
"Our record December sales results are further evidence of the great work
being done by Associates throughout our company," said W. Alan McCollough,
chairman and chief executive officer of Circuit City Stores, Inc. "They
executed an effective holiday season plan, which we believe translated into a
superior customer experience in all of our sales channels. More effective
advertising, improved inventory in-stock levels and a tightly integrated
multi-channel offering helped drive the year-over-year improvement. A strong
increase in the average ticket size more than offset a reduction in traffic,
compared with the prior year. We are particularly pleased that we were able to
deliver our strong sales results in Decembers promotional retail environment.
"In December we saw strength in a broad number of categories, but we saw
significant strength in flat panel televisions, MP3 players and accessories,
notebook computers, video game hardware, navigation products and imaging
products," said McCollough.
"We are pleased with the strong growth in our direct sales channel," said
McCollough. "For the month, Web-originated sales grew by 49 percent over the
prior year. We believe our guaranteed express pickup offering, which enabled
customers to shop for Christmas gifts over the Web through Christmas Eve, was
a competitive advantage during the month.
"We have discussed our work to upgrade, evolve and innovate our business
for several quarters, and we believe the results from those parallel efforts
are evident in our December sales performance," concluded McCollough.
The company raised its range of expectations for sales growth for fiscal
2006. The company now expects total sales growth of 10 percent to 12 percent.
The previous expectation was total sales growth of 8 percent to 10 percent.
The company now expects domestic comparable store sales growth in the upper-
single digit range. The previous expectation was comparable store sales growth
in the mid- to upper-single digit range.
The company reaffirmed the remainder of its outlook for fiscal 2006,
including operating margin (earnings from continuing operations before income
taxes as a percentage of sales) of 1.6 percent to 2.0 percent.
The fiscal 2006 outlook is based on the following assumptions:
* continued strong sales performance
* a stable competitive environment
* a stable macroeconomic environment
* no unforeseen inventory shortages
Domestic Segment
For the month of December, total sales for the domestic segment increased
12.1 percent to $1.88 billion from $1.67 billion in December last year, with
an 11.1 percent increase in comparable store sales.
The domestic segment relocated one Superstore during the month.
In the video category, Circuit City produced a double-digit comparable
store sales increase in the month. Television comparable store sales increased
by double digits, led by triple-digit comparable store sales growth in flat
panel displays. Growth in television sales and double-digit comparable store
sales growth in imaging products were partially offset by a double-digit
comparable store sales decline in DVD players.
In the information technology category, Circuit City produced a single-
digit comparable store sales increase in the month driven by a double-digit
comparable store sales increase in notebook computers.
In the audio category, Circuit City produced a double-digit comparable
store sales increase in the month, primarily reflecting double-digit
comparable store sales growth in portable digital audio products and mobile
audio. Growth in mobile audio reflects growth in navigation products and
digital satellite radio products. Comparable store sales growth in portable
and mobile audio products was partially offset by a single-digit comparable
store sales decline in home audio products.
In the entertainment category, Circuit City produced a single-digit
comparable store sales decrease in the month, reflecting a double-digit
comparable store sales decrease in music software and a single-digit decrease
in video software. These decreases were partially offset by a double-digit
increase in video game hardware, led by strong sales in multiple hardware
platforms.
International Segment
For the month of December, total sales for the international segment
increased 12.6 percent to $106.0 million from $94.1 million in December last
year, with a comparable store sales increase of 4.2 percent.
The effect of fluctuations in foreign currency exchange rates accounted
for approximately 5 percentage points of the international segments December
total sales increase. Comparable store sales are calculated in local currency.
About Circuit City Stores, Inc.
Circuit City Stores, Inc. is a leading specialty retailer of consumer
electronics. At December 31, 2005, the domestic segment operated 625
Superstores and six other locations in 157 U.S. media markets. At December 31,
2005, the international segment operated through 954 retail stores and dealer
outlets in Canada. Circuit City also operates Web sites at
http://www.circuitcity.com and at http://www.thesourcecc.ca.
Forward-Looking Statements
Statements made in this release, other than those concerning historical
financial information, may be considered forward-looking statements, which are
subject to risks and uncertainties, including without limitation: (1) the
impact of initiatives related to upgrading merchandising, marketing and
information systems on revenue and margin and the costs associated with these
investments, (2) the companys ability to continue to generate strong sales
growth through its direct sales channel and to generate sales and margin
growth through expanded service offerings, (3) the impact of inventory and
supply chain management initiatives on inventory levels and profitability, (4)
the effect of pricing and promotional activities of the companys competitors
and the companys response to those actions, (5) costs, changes in competitive
conditions, business disruption or lack of customer acceptance associated with
the rebranding of InterTANs RadioShack(R)-branded stores and dealer outlets
in Canada, (6) the possibility of adverse changes in general economic
conditions, and (7) the accuracy of the assumptions underlying the companys
projected 2006 results as discussed in this release. Discussion of additional
factors that could cause actual results to differ materially from managements
projections, forecasts, estimates and expectations is set forth under
Managements Discussion and Analysis of Results of Operations and Financial
Condition in the Circuit City Stores, Inc. Annual Report on Form 10-K for the
fiscal year ended February 28, 2005, in the Quarterly Report on Form 10-Q for
the fiscal quarter ended November 30, 2005, and in the companys other SEC
filings. A copy of the annual report is available on the companys Web site
at http://investor.circuitcity.com.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010709/CCLOGO )
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