THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, September 17, 1994 TAG: 9409170307
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium: 51 lines
Circuit City said Friday its second-quarter profits rose 29 percent, a robust performance that surprised both analysts and the retailer's executives.
The Richmond-based consumer electronics and home appliance retailer hopes that the results will help erase shareholders' fears that it has engaged in price war with its competitors, namely Minneapolis-based Best Buy.
``We're going head-to-head in a few places, so there's some serious competition,'' Circuit City spokesman Paul Rakov said. ``But there was no price war.''
On Friday, the retailer said its earnings increased to $36.1 million, or 37 cents per share in the quarter ended Aug. 31. That's up from $28 million, or 29 cents per share, in the same three-month period last year.
Sales grew 34 percent to $1.22 billion from $906.7 million, while same-store sales rose 14 percent. Same-store revenues, which are stores open at least a year, are considered a better barometer by analysts.
For the first six months of the year, earnings rose 23 percent to $55.7 million from $45.2 million. Sales rose to $2.27 billion from $1.71 billion, and same-store sales increased 13 percent.
``Sales growth exceeded expectations throughout the first half and resulted in higher-than-anticipated earnings for the period,'' said Richard L. Sharp, chairman and chief executive officer. ``Our strong performance reflects the appeal of our consumer offer in new and existing markets and the generally favorable climate for hard goods retailers.''
Kenneth R. Gassman Jr., a retail analyst with the Richmond brokerage Davenport & Co., said Circuit City also reaped gains from successful advertising campaigns. During the quarter, Circuit City opened 13 superstores. On Friday, it announced plans to enter two new markets - Hartford, Conn., and Springfield, Mass. - in fiscal 1996. The announcement is part of the company's plan to open about 180 superstores over three years.
Circuit City is the nation's largest retailer of brand-name consumer electronics and major appliances. It has 310 stores, including five superstores in Hampton Roads.
Best Buy had $2.8 billion in sales last year to Circuit City's $4.1 billion.
But Best Buy is continuing to open new stores in Circuit City territory. It announced plans last month to open several stores in northern Virginia, getting closer to Circuit City's base in Richmond. by CNB