CarMax 1999 Annual Report Download - page 9

stores. The satellite stores provide the same used-car selection and
sales offer available to the consumer at a hub store.
We believe that applying this concept to new locations will allow
us to add profitable fill-in satellite locations on a four- to six-acre site
with a 12,000-square-foot building. We believe that the satellite store
concept will allow us to add highly productive selling locations in sev-
eral high-density, high-cost trade areas. In fiscal 2000, we will focus on
adding these stores in existing multi-store markets; some of the stores
will be acquisitions of existing retail facilities. We also continue to
look for opportunities to add new-car franchises in existing markets
and are working hard to develop marketing programs that will
increase consumer awareness and customer traffic in all markets. We
are delaying entry into the Los Angeles market until fiscal 2001.
At CarMax, we believe that we have developed the preferred way
for consumers to buy cars. However, we also recognize that we must
introduce more consumers to our concept and continue to refine our
operating skills so that we produce not just a profit, but a profit that
generates acceptable returns for our shareholders. We continue to
adjust our strategy wherever we identify opportunities. I want to thank
all of our CarMax Associates as they work towards achievement of our
sales and profit targets and the shareholders who have maintained
their support as we continue to develop the CarMax business.
Sincerely,
W. Austin Ligon
President, CarMax
April 6, 1999
CIRCUIT CITY STORES, INC. 1999 ANNUAL REPORT 7
Despite these disappointments, we have a number of accom-
plishments worth noting.
First, the CarMax used-car concept has been highly successful in
our single-store markets, consistently producing strong store vol-
umes and profits while serving exceptionally large trade areas.
Second, the multi-store Washington/Baltimore and Atlanta metro
markets also have performed well. Our Laurel, Md., store is the
number one used-car retail location in the nation. Our Norcross,
Ga., store is producing market-leading used-car sales and ranks as
the top volume location among all Chrysler-Plymouth-Jeep Five
Star dealers in the U.S. Both of our Chrysler franchises carry the
Five Star rating, DaimlerChrysler Corporation’s highest award for
customer service excellence.
Third, we made further progress in our new-car franchise expansion,
meeting our objectives by adding six franchise locations and 14
total franchises. We continue to seek either new franchise grants or
franchises that can be improved by offering the CarMax buying
experience. Our fiscal 1999 growth reflects that strategy. We
acquired Nissan of Greenville and are operating the franchise at our
Greenville, S.C., superstore. Mitsubishi granted us two franchises,
which now operate at our Laurel, Md., and Dulles, Va., locations in
the Washington/Baltimore market, and we acquired a Mitsubishi
franchise that operates at our Town Center store in Atlanta, Ga. We
also acquired a Laurel, Md., Toyota franchise that is currently oper-
ating in the existing premises until we complete a Toyota facility
next door to our Laurel superstore. Finally, we acquired the Mauro
Auto Mall, a nine-franchise, multi-showroom auto mall well situated
between Chicago, Ill., and Milwaukee, Wisc. In addition to Jeep,
Nissan, Toyota and Mitsubishi franchises, this acquisition allowed
us to establish our first new-car Ford, Chevrolet, Cadillac, Subaru
and BMW locations.
FISCAL 2000
During the second half of fiscal 1999, we began experimenting with a
hub/satellite operating process in our Miami, Houston and Dallas/Ft.
Worth markets. By sharing reconditioning, purchasing and business
office operations with a nearby hub store, we have significantly
reduced operating overhead for the locations designated as satellite
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