Circuit City Stores Inc. (Richmond, Va.) reported that total sales for the third quarter ended November 30 were $2.41 billion, a 1 percent decrease from the same quarter a year earlier, and that comparable store sales for the period also fell 1 percent. For the nine months ended November 30, total sales were $6.5 billion, a 4 percent decrease from a year earlier, and comparable store sales decreased 5 percent.
The consumer electronics retailer's net loss from continuing operations in the third quarter totaled $24.1 million, down from $26.1 million a year earlier. And for the nine months ended November 30, its net loss totaled $83.3 million, up from $54.9 million a year earlier.
Despite those losses, the company's management says an ongoing effort to upgrade its stores is yielding positive results.
“We believe the third quarter sales in part reflect consumer reaction to our new store designs and merchandise displays, as well as a strong advertising program that is bringing customers back into our stores to experience the changes,” says W. Alan McCollough, Circuit City's chairman, president and ceo. “We generated a 4 percent comparable store sales increase in November on top of comparable store sales growth in each of the two previous Novembers. The industry trends and our own initiatives resulted in strong sales of new technologies such as digital and thin-panel televisions, portable DVD players, digital satellite systems, digital imaging products and portable digital audio. An exciting Web store and its integration with our brick-and-mortar locations also generated strong growth in Web-originated sales during the quarter.”
Since fiscal 2001, Circuit City has been upgrading its store base through new stores, remodels and relocations. To date, 125 of its 618 Superstores have been built, fully remodeled or relocated to provide a contemporary shopping experience with easier product access and more powerful merchandising displays. In addition, the company refixtured 222 stores this fiscal year to incorporate many of the new design features as quickly as possible.
“We remain pleased with results in our relocated stores, and expect to ultimately relocate a total of approximately one-third of the existing store base,” says McCollough. “The timing for specific store relocations will depend largely on real estate availability. Since the beginning of fiscal 2001, we have relocated 31 stores, of which 21 have been open for more than six months. In their first full six months following grand opening, these stores have averaged sales changes that are approximately 28 percentage points better than the sales pace of the remainder of the store base during the same time periods and an internal rate of return of approximately 20 percent.”
In addition to its 618 Circuit City Superstores, the retailer operates five mall-based stores.