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Circuit City: Flat-Screen TV Offsets Slumping DVD Sector

12 Apr, 2006 By: Erik Gruenwedel

Triple-digit same-store sales increases in flat-screen televisions and portable music players helped Circuit City Stores post fourth-quarter 2006 (ended Feb. 28) net income of $141.1 million, up 65% from $85.4 million during the same period last year.

Quarterly revenue topped $3.9 billion, compared to $3.5 billion last year.

Richmond, Va.-based Circuit City, which has 626 stores in the U.S. and 954 locations in Canada, reported double-digit same-store sales declines in DVD players and single-digit sales declines in video software.

As a percentage of company sales, the video category (hardware) represented 45% of quarterly sales, compared to 43% last year. Entertainment sales tallied 13%, down 2% from last year.

During an investor call, Doug Moore, EVP and chief merchandising officer, said Circuit City expects continued robust sales of entertainment hardware led by flat-screen TVs and high definition DVD players in fiscal year 2007.

“Now that the federal government has set the deadline for the analog signal cutoff, we believe more people will transition to a digital television,” said Moore. “This year, additional HD content in the HD gaming, the launch of Blu-ray and HD DVD players and software will be available and all signs point to continued high consumer demand.”

Circuit City plans to initiate in-store home theater service teams in 13 markets this year. The company has been test-marketing an unnamed variation of its “IQ Crew” home theater installation service in Massachusetts and Florida.

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