Circuit City 2009 Annual Report Download - page 27

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Table of Contents
Results of Operations
Key Performance Indicators (in thousands):
NET SALES
SEGMENTS:
The growth in Technology products sales in 2009 is attributable to increased retail and internet sales in the consumer channel, opening 5 retail
stores and the two acquisitions completed during 2009. Sales attributable to Circuit City and WStore Europe SA and subsidiaries (acquired in the
second and third quarters of 2009, respectively) totaled approximately $131.1 million for the year. On a constant currency basis, translating 2009
foreign results at 2008 exchange rates, sales would have grown 10.5%. or $120.9 million. Adjusting for the impact of the number of weeks,
Technology products sales increased 8.3% for the year.
North American technology products sales increased 14.3% in 2009 compared to 2008 benefiting from the opening of 5 retail stores and the
Circuit City acquisition which contributed $67.3 million in sales. On a constant currency basis, translating 2009 Other North America results at
2008 exchange rates, North American technology products sales would have grown to 15.2%. The movement in the exchange rates negatively
impacted sales by approximately $17.3 million. Adjusting for the impact of the number of weeks, North American technology products sales
increased 16.7%.
European technology products sales declined 9.8% to $848.5 million as the result of slower business to business sales. The trend of declining
sales in Europe is expected to reverse as global economic conditions improve and as a result of the WStore acquisition. Sales attributable to the
WStore acquisition totaled approximately $63.8 million in 2009. On a constant currency basis, translating 2009 foreign results at 2008 exchange
rates, European sales would have increased 1.2%. The movement in foreign exchange rates accounted for $103.6 million of the revenue decline
in Europe for the year. Adjusting for the impact of the number of weeks, European sales would have declined 8.3%.
The decline in Industrial products sales is attributable to the slowdown in business to business economic activity which started in the second half
of 2008 and continued into 2009. Adjusting for the impact of the number of weeks, Industrial products sales decreased 15.9%. The Company has
implemented strategies to improve sales growth such as expanding its product offerings and launching an improved customer website.
The Company announced plans to exit its Software solutions segment during the second quarter of 2009. As of December 31, 2009 substantially
all of the third party business activities of ProfitCenter Software had ended.
25
Years Ended December 31,
2009
2008
%
Change
2008
2007
%
Change
Net sales by segment:
Technology products
$
2,967,896
$
2,795,441
6.2
%
$
2,795,441
$
2,553,716
9.5
%
Industrial products
196,129
237,027
(17.3
)%
237,027
225,746
5.0
%
Software solutions
1,970
493
299.6
%
493
413
19.4
%
Total net sales
$
3,165,995
$
3,032,961
4.4
%
$
3,032,961
$
2,779,875
9.1
%
Net sales by geography:
North America
$
2,317,475
$
2,092,372
10.8
%
$
2,092,372
$
1,847,477
13.3
%
Europe
848,520
940,589
(9.8
)%
940,589
932,398
.9
%
Total net sales
$
3,165,995
$
3,032,961
4.4
%
$
3,032,961
$
2,779,875
9.1
%
Consolidated gross profit
$
460,248
$
458,559
.4
%
$
458,559
$
426,301
7.6
%
Consolidated gross margin
14.5
%
15.1
%
(.6
)%
15.1
%
15.3
%
(.2
)%
Consolidated selling, general and
administrative costs
$
386,857
$
375,192
3.1
%
$
375,192
$
332,359
12.9
%
Consolidated selling, general and
administrative
costs as % of sales
12.2
%
12.4
%
(.2
)%
12.4
%
12.0
%
.4
%
Operating income (loss) by segment:
Technology products
$
87,127
$
96,177
(9.4
)%
$
96,177
$
100,958
(4.7
)%
Industrial products
15,415
24,621
(37.4
)%
24,621
20,595
19.5
%
Software solutions
(6,457
)
(17,948
)
64.0
%
(17,948
)
(15,813
)
(13.5
)%
Consolidated operating income
$
73,391
$
83,367
(12.0
)%
$
83,367
$
93,942
(11.3
)%
Operating margin by segment
:
Technology products
2.7
%
3.2
%
(.5
)%
3.2
%
3.6
%
(.4
)%
Industrial products
.5
%
.8
%
(.3
)%
.8
%
.7
%
.1
%
Software solutions
(.2
)%
(.6
)%
.4
%
(.6
)%
(.6
)%
—
Consolidated operating margin
2.3
%
2.7
%
(.4
)%
2.7
%
3.4
%
(.7
)%
Effective income tax rate
36.8
%
36.9
%
(.1
)%
36.9
%
30.5
%
6.4
%
Net income
$
46,185
$
52,843
(12.6
)%
$
52,843
$
69,481
(23.9
)%
Net margin
1.5
%
1.7
%
(.2
)%
1.7
%
2.5
%
(.8
)%