CarMax 2001 Annual Report Download - page 7

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adding tax, title, tag and document fee information and
the ability to receive insurance quotations.
The numbers prove that consumers like what CarMax
has to offer. With an average of 4,000 used cars sold per
store, CarMax’s fiscal 2001 store volumes were more than
three times the combined new- and used-car volume of
the average new-car dealership. New-car dealers, who sell
more than 85 percent of late-model used cars, constitute
our primary competition.
Profit Driven by Execution. Sales are not the only driver
of profits. Profitability is enhanced by:
●purchasing and inventory management systems:
We must purchase large volumes of used cars—one at
a time. To accomplish this task, we have developed
unique training programs for our buying team and
proprietary databases that track each car’s purchase
price and activity, from the point of purchase to its
sale at retail. These systems enable us to measure
our performance and continuously hone our buying
skills. Our integrated inventory management system
further helps ensure that we have the right cars in the
right location at the right time, providing historical
statistical data about which makes and models sell at
which locations during which months.
●efficient and high- quality reconditioning: CarMax’s
unique, systematic reconditioning process is critical to
guaranteeing high quality at low cost. A methodical,
sequenced procedure brings every CarMax used car up
to our exacting mechanical, electrical, safety and
cosmetic standards. Through process engineering, we
have reduced the average reconditioning time per car
by approximately 35 percent over the last two years.
●effective store operations processes: The consumer
offer and operating processes are identical in all stores.
Company-wide integrated information systems support
cost efficiencies, consistent execution across all stores
and continuous operational improvement. Management
development and store Associate training reinforce
CarMax’s distinct methods to ensure that we deliver
high levels of customer satisfaction.
Growth Opportunities. With a year of solid profitability
behind us and an expectation for sustained profitable
growth, we plan to resume our geographic expansion.
Our focus for the next several years will be on single-
store markets and satellite fill-in stores in our multi-
store markets, both of which we believe offer the lowest
risk, highest return growth opportunities. Single-store
markets typically are mid-sized cities with populations of
1 million to 2.5 million people. In fiscal 2002, CarMax
plans to enter two single-store markets—Sacramento, Calif.,
and Greensboro, N.C.
Beyond fiscal 2002, we expect to gradually increase the
expansion pace. We currently expect to open four to six
stores, including satellites, in fiscal 2003. Adding satellite
fill-in stores extends the CarMax consumer offer into
underserved trade areas in our existing metro markets and
leverages our operations and advertising in those markets.
We look forward to continuing sales and profit growth
from CarMax, enabling us to fulfill the return on invest-
ment opportunities envisioned when we launched the
business in 1993.
Leadership Recognition. Austin Ligon, president of CarMax,
and the entire CarMax team have made considerable
progress developing the CarMax offer and establishing a
strong profitable base for growth. Last year, we were pleased
to announce the promotion of Tom Folliard to senior vice
president—store operations. Early this year, he became exec-
utive vice president—store operations. Tom joined CarMax in
1993 as senior buyer and was an early member of the used-
car superstore development team. He became director of
purchasing in 1994 and, since 1996, had served as vice
president—merchandising. Tom played the key leadership
role in the development of CarMax’s buying and inventory
management team and system.
Only our outstanding team of Circuit City Associates
could have met the challenges Circuit City faced in fiscal
2001, and the great year enjoyed by CarMax followed years
of tenacious work by the CarMax team. I am proud to be
working with these Associates, and I thank them and their
families for the sacrifices they make for our company on a
daily basis. I also thank our customers, our vendors, our
board of directors and our shareholders for their support.
W. Alan McCollough
President and Chief Executive Officer
Circuit City Stores, Inc.
April 2, 2001