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Circuit City Q4 Comps Decline

RICHMOND, VA-The number-two consumer electronics chain is going through a rough patch.

By Dees Stribling | Updated on March 06, 2005

RICHMOND, VA-Circuit City, currently the target of an unsolicited takeover bid by a Boston-based hedge fund, turned in a lackluster fourth fiscal quarter (ended Feb. 28), with comp-store sales down 1.8% compared with the same quarter a year ago. Comp-store sales for the entire fiscal year were up a meager 0.7%.

Beginning with this quarter, the company used a different methodology for calculating comp-store sales, one that includes extended warranties, installations and other non-merchandise revenues. Previously, revenues included in comp-store sales calculation were limited to merchandise sales. The new methodology resulted in somewhat better results for the company; Q4 comps, for example, would have been a 2.9% decrease under the former methodology, and for fiscal 2004, the company’s same-store comps would have posted a 0.2% decline.

Certain products and services provided to be a letdown during Q4. Circuit City cited a decrease in wireless sales to account for 100 basis points of the company’s overall comp-store sales decrease in the quarter. Also, a decrease in digital video service sales accounted for about 80 more basis points of the decline. The holiday month of December proved particularly weak for the company, which saw a 5% comp-store decline during the month compared to December 2003.

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