CarMax 2000 Annual Report Download - page 4

CHAIRMAN’S LETTER
I am pleased to report that fiscal 2000 produced
the most successful year ever for our Circuit
City business and meaningful progress for our
CarMax auto superstores.
Circuit City Stores, Inc.reported consolidated
sales growth of 17 percent,reaching $12.61 billion
in total sales. Earnings from continuing opera-
tions rose 55 percent to $327.8 million.
In our Circuit City business,total sales grew
13 percent to $10.60 billion,comparable store
sales increased 8 percent and earnings rose
39 percent to $326.7 million. CarMax produced
total sales of $2.01 billion,a 37 percent
increase,while comparable store sales rose
2 percent. CarMax exceeded the financial goals
we established at the beginning of the year,
producing a profit of $1.1 million compared
with a net loss of $23.5 million in fiscal 1999.
Yet, the year was not without disappointments.
In June,we discontinued Digital Video Express.
Although this innovative system for watching
movies was adopted enthusiastically by
consumers,Divx did not obtain the studio
support necessary for long-term success.
Consolidated and Circuit City Group net earn-
ings for fiscal 2000 include after-tax losses of
$16.2 million from the discontinued Divx
operations and $114.0 million on the disposal
of the Divx business.
CIRCUIT CITY: MAXIMIZING AN
ENORMOUS SALES OPPORTUNITY
For Circuit City,the promise of the digital product
cycle is becoming reality as new technologies
continue to drive industry growth. This cycle is
dominated by feature-rich products that offer
new and often complicated functionality for the
consumer
— an ideal fit for our high-service store
format. We believe this new product cycle can
last throughout the decade. We are also enjoying
sales strength in more traditional products,as
evidenced by a record year for VCR unit sales.
As we enter the new decade,we are focused on
maximizing the sales of new and existing prod-
ucts in our Circuit City Superstores.
In fiscal 2000,personal computers remained
our strongest product category,reflecting
continued increases in household penetration,
higher consumer use of the Internet and new
capabilities such as digital imaging and record-
ing. We saw high demand for related products,
including digital still cameras, digital cam-
corders and MP3 audio products. In the
consumer electronics categories,our DVD
player sales rose rapidly, DIRECTV and wire-
less communications maintained their high
growth rates and big-screen television sales
remained healthy. In the fall,we introduced
the first digital televisions in our stores.
Circuit City is poised for continued success in
this exciting industry cycle. When industry
growth was minimal,our financial resources
allowed us to continue our geographic expansion
and maintain our commitment to outstanding
customer service. As a result,we entered this
new period as the only specialty retailer in our
categories with a well-trained and knowledge-
able sales force and a nationwide presence. Our
investments in sales training have yielded an
outstanding training program, which we will
improve even further with programs to be
delivered via the Internet. Our long history of
successful consumer electronics product intro-
ductions and our national store base enabled
us to establish alliances with America Online,
Inc.,the world’s leading interactive services
company, and Sony Electronics Inc.,the
world’s leading consumer electronics company,
to introduce their latest technologies beginning
in fiscal 2001.
In fiscal 2000,we undertook significant initiatives
to make it even easier for consumers to shop at
Circuit City. We became the first national brick-
and-mortar specialty retailer to sell consumer
electronics on the Internet. We also enhanced
our Superstore design to help ensure that we
are maximizing the sales opportunity in all
areas,adding displays for digital televisions,
digital imaging and broadband Internet access.
In all stores opened during the fall,we signifi-
cantly expanded the number of products that
consumers can select and take directly to the
cash register, if they choose.
CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
2
In fiscal 2000, we began to see the exciting potential
that the digital product cycle brings to our Circuit City
business. At CarMax, we produced marked operating
improvement in our core business
— the used-car
superstores.
RICHARD L. SHARP