As it was reporting a sharp turnaround in its fortunes, Circuit City Stores Inc. (Richmond, Va.) also announced that president and ceo W. Alan McCollough has been elected chairman of the board, succeeding Richard Sharp, who retired from the board.
Sharp had spent 20 years with Circuit City, including 18 as president. He also became ceo in 1986 and chairman in 1994. He relinquished the ceo position to McCollough in 2000 when he announced his intention to retire this year. He has, however, been nominated as chairman of CarMax Auto Superstores, the Circuit City subsidiary that is in the process of being separated from the parent company.
McCollough joined Circuit City in 1987 as general manager of corporate operations and was named assistant vice president in 1989. He became president and coo in 1997.
The retailer announced that for the first quarter 2002, ending May 31, total corporate sales increased 13 percent and net earnings jumped 65 percent, from $17 million to $28 million.
Total sales for the Circuit City Group of consumer electronics stores also increased 13 percent in the quarter, and same-store sales increased 12 percent.
The retailer acknowledged that this year's results were reduced by costs associated with remodeling and relocation of Circuit City Superstores. In the current year's first quarter, remodel and relocation costs totaled 2 cents per share, related to the initial phases of rolling out a remodeled video department, which was completed in 18 stores; lighting upgrades in more than 100 stores; and the relocation of two stores. In last year's first quarter, remodel and relocation costs totaled 1 cent per share related to the relocation of one store.
“Not only did we post strong sales growth in focus categories such as video [including big-screen TVs, DVD players and digital satellite systems] and wireless communications,” said McCollough, “but we also reported substantially higher sales in our more self-serve product selections, including DVD software and video game hardware, software and accessories. PC sales growth was driven by strong sales of notebook computers and a more competitive promotional stance. Our [strengthened] comparable store sales pace [reflects] the growing consumer response to our customer-service initiatives, aggressive promotions in traffic-building categories and on entry-level products and a stronger inventory position in specific product categories.”
As had previously been announced, Circuit City directors authorized management to initiate a process that would separate the CarMax auto superstore business from the Circuit City consumer electronics business through a tax-free transaction in which CarMax, Inc., presently a wholly owned subsidiary, would become an independent, separately traded public company.