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Circuit City 1Q hits target
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June 16, 2000: 12:44 p.m. ET
CarMax car dealership sales boost electronics retailer's first-quarter results
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NEW YORK (CNNfn) - Circuit City Stores Inc. posted fiscal first-quarter earnings Friday that met Wall Street's expectations, citing strong sales at its CarMax car dealerships.
For the quarter ended May 31, the Richmond, Va.-based company reported earnings of $57.1 million, or 28 cents a share, a 38 percent increase from the $41.4 million, or 20 cents a share, it earned in the year-ago quarter.
 That matches the 28 cents a share predicted by analysts in a survey by earnings tracker First Call/Thomson Financial.
The earnings news comes a week after the electronics and appliance retailer reported flat May sales, which analysts had attributed to a drop in appliance purchases due to rising interest rates.
The company also said that, effective immediately, it will begin reporting sales quarterly, rather than monthly.
"We have found that these releases focus attention on short-term sales variations rather than the overall business trends that are critical to management decision and to quarterly and longer-term earnings results," Circuit City Group Chairman and CEO Richard Sharp said.
Total sales for the first quarter rose 11 percent to $2.45 billion from $2.20 billion a year ago. Comparable-store sales, a closely watched measure that includes sales at stores open at least a year, rose 7 percent in the quarter.
Separately, the company reported earnings for its core Circuit City stores of $46.7 million, or 23 cents a share, a 19 percent increase over the $39.3 million, or 19 cents a share, a year earlier.
The earnings reflect a reversal of the company's loss in the year-ago quarter from the discontinuation of its Digital Video Express business in its Circuit City stores.
Sharp told analysts in a conference call Friday that he expects comparable-store sales gains for fiscal 2001 in the upper single-digit range as the company expands with new stores in south Florida.
Sharp also sees earnings per share increases for the store group in the 20-25 percent range.
W. Alan McCollough, president and chief operating officer of Circuit City Stores, said he welcomes the entry of rival Best Buy (BBY: Research, Estimates) into the New York market later this year because it makes it easier for consumers to compare prices.
Sales of digital cameras and home office products helped the company meet expectations, McCollough said, adding that new in-store displays for Sony and America Online telecommunications products are expected to generate even greater revenue as they are put in place nationwide.
Total sales for the company's CarMax car dealership group rose 29 percent for the quarter to $625.7 million from $486.1 million a year earlier.
W. Austin Ligon, president of CarMax, told analysts Friday that the exit of rival AutoNation from the market along with growing consumer awareness and use of the company's Internet site helped drive the unit's successful quarter.
Ligon said studies have shown that customers spend an average of 20 minutes on the CarMax Web site, nearly twice as much time as they're spending on other car retailing and research sites.
However Ligon cautioned that the effect of rising interest rates on the economy could slow future sales.
Circuit City operates 616 stores nationwide and 40 CarMax stores.
Shares of Circuit City (CC: Research, Estimates) slipped 1-5/16 to 36-1/16 in trading Friday. 
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Circuit City
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