Filed by Circuit City Stores, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
And deemed filed pursuant to Rule 14a-12
Of the Securities Exchange Act of 1934
Subject Company: Circuit City Stores, Inc.
Commission File No. 001-05767
CIRCUIT CITY STORES, INC. REPORTS FOURTH QUARTER
------------------------------------------------
AND FISCAL YEAR 2002 SALES FOR THE COMPANY,
-------------------------------------------
THE CIRCUIT CITY GROUP AND THE CARMAX GROUP
-------------------------------------------
Richmond, Va., March 6, 2002 - Circuit City Stores, Inc. today reported sales
for the fourth quarter and the fiscal year ended February 28, 2002, for the
company, the Circuit City Group (NYSE:CC) and the CarMax Group (NYSE:KMX) and
reiterated its earnings expectations for both Groups.
Circuit City Stores, Inc.
For the fourth quarter ended February 28, 2002, total sales for Circuit City
Stores, Inc. increased 9 percent to $4.17 billion from $3.82 billion in the
fourth quarter of the prior year. For the fiscal year ended February 28, 2002,
total sales for Circuit City Stores, Inc. declined 1 percent to $12.79 billion
from $12.96 billion in the prior fiscal year.
Circuit City Group
Circuit City Group Sales: For the fourth quarter ended February 28, 2002, total
sales for the Circuit City Group increased 7 percent to $3.39 billion from $3.18
billion in the fourth quarter of the prior year. Comparable store sales
increased 6 percent for the quarter.
For the fiscal year ended February 28, 2002, total sales for the Circuit City
Group declined 8 percent to $9.59 billion from $10.46 billion in the prior year.
Comparable store sales declined 10 percent. Excluding the major appliance
category, from which the company completed its exit in early November 2000,
comparable store sales declined 4 percent.
"As previously announced, after a strong December performance, sales in January
and February ran lower than originally anticipated," said W. Alan McCollough,
chairman and chief executive officer of Circuit City Stores, Inc. "The
comparable store sales pace in the last two months of
-more-
Circuit City Stores, Inc.
Page 2 of 6
the quarter reflected inventory shortages in select areas as we emerged from the
holiday season, as well as the expected seasonal shift in product category
volumes. Although we continued to see increases in store traffic versus the
prior year, comparable store sales increases for January and February combined
were in the low single digits. While inventory shortages and limited selections
plagued some product categories after December, we were pleased to see strong
sales trends continue in focus categories such as big-screen televisions,
digital satellite systems and wireless phones, as well as in expanded
categories, including video game hardware, software and accessories; DVD
software and digital cameras."
The percent of merchandise sales represented by each major product category for
the fourth quarter and the fiscal year was as follows:
Three Months Ended Fiscal Year Ended
February 28 February 28
------------------------- ---------------------------
2002 2001 2002 2001
---- ---- ---- ----
Video 40% 38% 39% 35%
Audio 15 17 15 16
Information Technology 32 35 34 35
Entertainment 13 10 12 7
Appliances -- -- -- 7
------------------------- ---------------------------
Total 100% 100% 100% 100%
------------------------- ---------------------------
Store Openings: During the quarter, Circuit City opened one Superstore in West
Palm Beach, Fla. For the full year, Circuit City opened a total of 11
Superstores and relocated eight Superstores.
Circuit City Group Fourth Quarter and Fiscal Year 2002 Earnings Expectations:
"We plan to release fourth quarter and fiscal year 2002 earnings on April 2,"
said McCollough. "We remain comfortable with our recent guidance for the fourth
quarter and fiscal year 2002 earnings. We still expect the Circuit City business
to contribute 68 cents per share to 71 cents per share to the Circuit City
Group's fourth quarter earnings, before additional lease termination costs of 3
cents per share related to the fiscal 2001 exit from the appliance business."
The company confirmed today that it expects CarMax to contribute approximately 6
cents to the Circuit City Group's fourth quarter earnings per share. This
contribution, combined with the contribution from the Circuit City business,
including the lease termination costs, would result in fourth quarter earnings
per share of 71 cents to 74 cents for the Circuit City Group.
The company expects the Circuit City business to contribute 62 cents to 65 cents
to fiscal year 2002 Circuit City Group earnings per share before the additional
lease termination costs and before the contribution from CarMax. Including the 3
cents per share of additional lease termination costs and an anticipated
contribution from CarMax of approximately 31 cents per
-more-
Circuit City Stores, Inc.
Page 3 of 6
share, the company expects fiscal year 2002 earnings per Circuit City Group
share of 90 cents to 93 cents.
-more-
Circuit City Stores, Inc.
Page 4 of 6
CarMax Group
CarMax Group Sales: Total sales for the CarMax Group rose 22 percent for the
quarter ended February 28, 2002, to $779.3 million from $640.0 million in the
same period last year. Comparable store dollar sales rose 23 percent, and
comparable store unit sales rose 22 percent. Comparable store used-vehicle
dollar sales rose 25 percent, and comparable store used-vehicle unit sales rose
23 percent. Comparable store new-vehicle dollar sales rose 12 percent, and
comparable store new-vehicle unit sales rose 11 percent.
For the fiscal year ended February 28, 2002, total sales for the CarMax Group
rose 28 percent to $3.20 billion from $2.50 billion in the prior year.
Comparable store dollar sales rose 28 percent, and comparable store unit sales
rose 23 percent. Comparable store used-vehicle dollar sales rose 30 percent, and
comparable store used-vehicle unit sales rose 24 percent. Comparable store
new-vehicle dollar sales rose 24 percent, and comparable store new-vehicle unit
sales rose 21 percent.
"Our fourth quarter sales increase reflects a continuation of the strong
used-car unit sales growth we experienced through the first nine months of the
fiscal year," said W. Austin Ligon, president of CarMax. "New-car unit growth
and used-car unit growth received an above-trend boost in December from
customers drawn into the market by the new-car manufacturers' zero-percent
financing incentives. Once manufacturers largely replaced zero-percent financing
with more conventional incentives in early January, our customer-preferred
approach to automobile retailing continued to drive used-car unit sales growth
for the January and February period in line with the 20 percent level we saw in
the first half of the year. Although new-car unit sales declined in January
roughly in line with the industry decline, comparable store new-car unit sales
grew modestly in February."
Percent Vehicle Sales by Category
Three Months Fiscal Year
Ended February 28 Ended February 28
--------------------------------- ---------------------------------
2002 2001 2002 2001
---- ---- ---- ----
Vehicle Dollars:
Used Vehicles 85% 82% 82% 81%
New Vehicles 15% 18% 18% 19%
-------------------------------- ---------------------------------
Total 100% 100% 100% 100%
-------------------------------- ---------------------------------
Vehicle Units:
Used Vehicles 89% 88% 87% 87%
New Vehicles 11% 12% 13% 13%
-------------------------------- ----------------- ---------------
Total 100% 100% 100% 100%
-------------------------------- ----------------- ---------------
-more-
Circuit City Stores, Inc.
Page 5 of 6
Comparable Store Sales Growth
FY02 FY01
---------------------------------------- --------------------------------------------
1Q 2Q 3Q 4Q FY02 1Q 2Q 3Q 4Q FY01
-- -- -- -- ---- -- -- -- -- ----
Vehicle Dollars:
Used Vehicles 28% 30% 36% 25% 30% 13% 18% 15 % 28% 19%
New Vehicles 23% 14% 51% 12% 24% 24% 17% (4)% 4% 9%
Total 27% 27% 38% 23% 28% 14% 18% 11 % 23% 17%
Vehicle Units:
Used Vehicles 20% 22% 29% 23% 24% 8% 13% 11 % 19% 13%
New Vehicles 19% 12% 46% 11% 21% 23% 16% (3)% 3% 9%
Total 20% 21% 31% 22% 23% 10% 13% 9 % 17% 12%
Average Retails
---------------
FY02 FY01
------------------------------------------- ----------------------------------------------
1Q 2Q 3Q 4Q FY02 1Q 2Q 3Q 4Q FY01
-- -- -- -- ---- -- -- -- -- ----
Used Vehicles $15,100 $15,300 $15,100 $15,000 $15,100 $14,200 $14,400 $14,400 $14,700 $14,400
New Vehicles $23,200 $22,800 $23,500 $23,100 $23,100 $22,500 $22,400 $22,700 $23,100 $22,600
Blended
Average $16,200 $16,300 $16,300 $15,800 $16,200 $15,300 $15,500 $15,400 $15,700 $15,500
Store Openings: CarMax opened two superstores at the end of the fourth quarter,
the first stores opened as part of the resumption of geographic growth detailed
in the expansion plan CarMax announced on March 26, 2001. On February 25, 2002,
CarMax opened a satellite superstore in Merrillville, Ind., in the greater
Chicago market. On February 26, CarMax entered the mid-sized market of
Greensboro, N.C., with a standard-sized superstore.
Fourth Quarter and Fiscal Year 2002 Earnings Expectations: "We now expect fourth
quarter net earnings per CarMax Group share of approximately 17 cents, the top
end of the range we had estimated when we increased the fourth quarter earnings
expectation on February 6, 2002," said Ligon. "Our comparable store used-car
unit sales growth continues to generate substantial leverage for fixed expenses
and corporate overhead, and we have continued to benefit from a lower cost of
funds, which has increased the yield spreads for our finance operation. We also
were fortunate to experience no major negative effect on sales from winter
weather conditions during the fourth quarter." Earnings per share reported for
the CarMax Group in the fourth quarter of the prior fiscal year were 7 cents.
"For the fiscal year, we expect earnings per CarMax Group share of approximately
82 cents compared with the prior year's earnings per share of 43 cents," Ligon
said. "We plan to announce our sales, earnings and new-store opening
expectations for the new fiscal year, fiscal 2003, when the company releases
fourth quarter and year-end earnings on April 2, 2002."
-more-
Circuit City Stores, Inc.
Page 6 of 6
CarMax Split-Off
On February 22, 2002, Circuit City Stores, Inc. (NYSE:CC,KMX) announced that its
board of directors has authorized management to initiate a process that would
separate its CarMax auto superstore business from the Circuit City consumer
electronics business through a tax-free split-off in which CarMax, Inc.,
presently a wholly owned subsidiary of Circuit City Stores, Inc., would become a
separate publicly traded company.
About Circuit City Stores, Inc.
Circuit City is a leading national retailer of brand-name consumer electronics,
personal computers and entertainment software. CarMax is the nation's leading
retailer of used cars. With headquarters in Richmond, Va., Circuit City Stores,
Inc. operates 604 Circuit City Superstores and 20 mall-based Circuit City
Express stores, giving it more locations in more markets than any other consumer
electronics specialty retailer. The company operates 40 CarMax retail units in
38 locations, including 35 used-car superstores. CarMax operates 18 new-car
franchises, 15 of which are integrated or co-located with its used-car
superstores. For more information, access the company's Web sites at
www.CircuitCity.com and www.CarMax.com.
This release contains forward-looking statements, which are subject to risks and
uncertainties. Additional discussion of factors that could cause actual results
to differ materially from management's projections, forecasts, estimates and
expectations is contained in the company's SEC filings.
# # #
Contact: Ann Collier, Vice President of Financial and Public Relations, (804)
527-4058
Celeste Gunter, Director of Circuit City Investor Relations, (804)
418-8237
Dandy Barrett, Director of CarMax Investor Relations, (804)935-4591