CIRCUIT CITY STORES, INC. ANNUAL REPORT 2000
MAKING IT EASIER.
Making it easier.
Easier to learn about new technologies
through knowledgeable sales help and
effective displays. Easier to find the real
price of a car through low, no-haggle
prices. Easier to buy any way the consumer
wants to buy—in our stores and online.
Serving the consumer by making it easier.
THE CIRCUIT CITY STORES, INC. COMMON STOCK SERIES INCLUDE:
Circuit City Group Common Stock (NYSE: CC). Circuit City is a leading national retailer of brand-name consumer electronics, personal computers, major appliances and enter-
tainment software. At the end of ﬁscal year 2000, the Circuit City business included 571 Superstores in 155 markets and 45 Circuit City Express mall stores. The Circuit City Group
also includes a retained interest in the equity value of the CarMax Group. The Circuit City Group includes Digital Video Express, which is now classiﬁed as a discontinued operation
for ﬁnancial reporting purposes.
CarMax Group Common Stock (NYSE: KMX). As the pioneer of the used-car superstore concept, CarMax is transforming automobile retailing with a friendly offer that delivers
low, no-haggle prices, a broad selection and high-quality customer service. At the end of ﬁscal year 2000, CarMax operated 40 locations, including 34 used-car superstores and 20
IN THIS REPORT, WE USE THE FOLLOWING TERMS AND DEFINITIONS:
Circuit City Stores and Circuit City Stores, Inc. refer to the corporation, which includes the Circuit City retail stores and related operations, the CarMax retail stores and related
operations, and the company’s interest in Digital Video Express, which is classiﬁed as a discontinued operation.
Circuit City refers to the retail operations bearing the Circuit City name and to all related operations such as product service and its ﬁnance operation.
Circuit City Group refers to the Circuit City and Circuit City-related operations, the retained interest in the equity value of the CarMax Group and the company’s interest in Digital
Video Express, which is classiﬁed as a discontinued operation.
CarMax Group and CarMax refer to retail locations bearing the CarMax name and to all related operations such as its ﬁnance operation.
FO R WA R D - LO O K I N G S TAT E M E N T S :
This report contains forward-looking statements, which are subject to risks and uncertainties, including, but not limited to, risks associated with the development of new business
concepts. Additional discussion of factors that could cause actual results to differ materially from management’s projections, forecasts, estimates and expectations is contained in the
company’s SEC ﬁlings, including the Circuit City Stores, Inc.“Management’s Discussion and Analysis” contained in this annual report.
Years Ended February 29 or 28
2000 1999 1998
(Dollar amounts in thousands except per share data)
CIRCUIT CITY STORES, INC.
Net Sales and Operating Revenues .......................................................................... $10,810,468 $8,870,797
Earnings from Continuing Operations.................................................................... $ 211,470 $ 124,947
Total Assets .............................................................................................................. $ 3,445,266 $3,231,701
Total Stockholders’ Equity........................................................................................ $ 1,905,130 $1,730,039
Working Capital....................................................................................................... $ 1,430,710 $1,240,523
CIRCUIT CITY GROUP
Net Sales and Operating Revenues .......................................................................... $ 9,344,170 $7,996,591
Earnings from Continuing Operations Before Inter-Group
Interest in the CarMax Group............................................................................. $ 234,984 $ 159,170
Earnings from Continuing Operations.................................................................... $ 216,927 $ 132,710
Earnings per Share from Continuing Operations:
Basic................................................................................................................... $ 1.09 $ 0.68
Diluted................................................................................................................ $ 1.08 $ 0.67
Number of Circuit City Superstores......................................................................... 537 500
Net Sales and Operating Revenues........................................................................... $ 1,466,298 $ 874,206
Net Earnings (Loss)................................................................................................. $ (23,514) $ (34,223)
Net Earnings (Loss) per Share:
Basic................................................................................................................... $ (0.24) $ (0.35)
Diluted................................................................................................................ $ (0.24) $ (0.35)
Number of CarMax Stores........................................................................................ 31 18
All Circuit City Group earnings per share calculations have been adjusted to reﬂect a two-for-one stock split effective June 30, 1999. On June 16, 1999, Digital Video Express announced that it would
discontinue operations. Results of continuing operations of Circuit City Stores, Inc. and Circuit City Group shown in the tables above exclude Digital Video Express. See notes to consolidated and group
CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
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
RICHARD L. SHARP
growth was minimal, our ﬁnancial resources
I am pleased to report that ﬁscal 2000 produced CIRCUIT CITY: MAXIMIZING AN
allowed us to continue our geographic expansion
the most successful year ever for our Circuit ENORMOUS SALES OPPORTUNITY
For Circuit City,the promise of the digital product and maintain our commitment to outstanding
City business and meaningful progress for our
cycle is becoming reality as new technologies customer service. As a result, we entered this
CarMax auto superstores.
continue to drive industry growth. This cycle is new period as the only specialty retailer in our
Circuit City Stores, Inc. reported consolidated
dominated by feature-rich products that offer categories with a well-trained and knowledge-
sales growth of 17 percent,reaching $12.61 billion
new and often complicated functionality for the able sales force and a nationwide presence. Our
in total sales. Earnings from continuing opera-
consumer—an ideal ﬁt for our high-service store investments in sales training have yielded an
tions rose 55 percent to $327.8 million.
format. We believe this new product cycle can outstanding training program, which we will
In our Circuit City business, total sales grew
last throughout the decade. We are also enjoying improve even further with programs to be
13 percent to $10.60 billion, comparable store
sales strength in more traditional products, as delivered via the Internet. Our long history of
sales increased 8 percent and earnings rose
evidenced by a record year for VCR unit sales. successful consumer electronics product intro-
39 percent to $326.7 million. CarMax produced
As we enter the new decade, we are focused on ductions and our national store base enabled
total sales of $2.01 billion, a 37 percent
maximizing the sales of new and existing prod- us to establish alliances with America Online,
increase, while comparable store sales rose
ucts in our Circuit City Superstores. Inc., the world’s leading interactive services
2 percent. CarMax exceeded the ﬁnancial goals
company, and Sony Electronics Inc., the
In ﬁscal 2000, personal computers remained
we established at the beginning of the year,
world’s leading consumer electronics company,
our strongest product category, reﬂecting
producing a proﬁt of $1.1 million compared
to introduce their latest technologies beginning
continued increases in household penetration,
with a net loss of $23.5 million in ﬁscal 1999.
in ﬁscal 2001.
higher consumer use of the Internet and new
Yet, the year was not without disappointments.
capabilities such as digital imaging and record- In ﬁscal 2000,we undertook signiﬁcant initiatives
In June, we discontinued Digital Video Express.
ing. We saw high demand for related products, to make it even easier for consumers to shop at
Although this innovative system for watching
including digital still cameras, digital cam- Circuit City. We became the ﬁrst national brick-
movies was adopted enthusiastically by
corders and MP3 audio products. In the and-mortar specialty retailer to sell consumer
consumers, Divx did not obtain the studio
consumer electronics categories, our DVD electronics on the Internet. We also enhanced
support necessary for long-term success.
player sales rose rapidly, DIRECTV and wire- our Superstore design to help ensure that we
Consolidated and Circuit City Group net earn-
less communications maintained their high are maximizing the sales opportunity in all
ings for ﬁscal 2000 include after-tax losses of
growth rates and big-screen television sales areas, adding displays for digital televisions,
$16.2 million from the discontinued Divx
remained healthy. In the fall, we introduced digital imaging and broadband Internet access.
operations and $114.0 million on the disposal
the ﬁrst digital televisions in our stores. In all stores opened during the fall, we signiﬁ-
of the Divx business.
cantly expanded the number of products that
Circuit City is poised for continued success in
consumers can select and take directly to the
this exciting industry cycle. When industry
cash register, if they choose.
2 CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
CIRCUIT CITY STORES, INC.
also have proven to be strong trafﬁc drivers for merchandising,Alan gained extensive experience
In ﬁscal 2001, we will add or improve displays
new-car franchises. in the two principal operating components of our
for the newer technologies in all stores nation-
business—store operations and merchandising.
wide. These improvements will help ensure
In south Florida, Texas and Chicago, we believe
that we are in the best position to capture the He was named to his present position in March
that we can further improve our results with
sales opportunity presented by the digital cycle. 1997. Alan’s experience,his intense commitment
increased consumer awareness and additional
We also will remodel 30 to 35 stores in central to customer service and the support he engen-
satellite stores, including two prototype stores
and south Florida and in Richmond,Va., pro- ders among our Associates and our vendors will
opened late in ﬁscal 2000. We also are seeking
viding easier access to self-service products help him to ensure that the company maximizes
appropriate opportunities to integrate new-car
and expanding our assortments in key areas. the exciting opportunities ahead.
franchises with existing used-car superstores.
Other management changes include the pro-
CARMAX: A STEADY FOCUS AND
CarMax is aggressively leveraging the opportu-
motion last summer of Philip Dunn to senior
nities of the Internet. At the end of ﬁscal 2000,
vice president. Phil joined Circuit City in 1984.
At CarMax,we slowed geographic growth in ﬁscal
we introduced a redesigned CarMax Web site
He was named treasurer in 1991, was promoted
2000 to concentrate on improving operations and
that provides online access to all the vehicle
to vice president in 1992 and added the title of
proﬁtability. With comparable store sales growth
information available at our stores. Consistent
controller in 1996.
in our used-car business at year-end, our ﬁrst
with our commitment to service, carmax.com
annual proﬁt and a strong ﬁnish, we surpassed
offers dedicated Internet sales consultants for As I conclude ﬁscal 2000 and my tenure as chief
our ﬁnancial goals for the year. The marked
customers who want to buy online. Recognizing executive ofﬁcer of Circuit City Stores, I believe
operating improvement is particularly signiﬁ-
that consumers use a variety of well-known that the company is well positioned for the
cant because it came from our core used-car
Internet resources to research purchases, future. By focusing on the consumer and devel-
superstores, including those with integrated
CarMax also is testing relationships with the oping a truly outstanding team of Associates, we
new-car franchises. The improvement reﬂects:
leading automotive sites. These services can be have built a company with the ﬁnancial strength
• ongoing productivity improvements in sales
nationwide mechanisms for building CarMax’s to perform extraordinarily well in good times
consumer awareness. and to more than weather the down cycles. Our
• better results from the proﬁt improvement
Circuit City and CarMax Associates are talented
In ﬁscal 2001, we will focus on growing sales in
plan initiated at the end of ﬁscal 1998;
and enthusiastic. I would like to express my
existing markets. Signiﬁcant opportunities
• our hub and satellite operating strategy;
deepest appreciation to them and their families,
remain in these markets, and we believe that a
• the continued integration of new-car fran-
our shareholders, our vendors and our customers
continued focus on maximizing these opportu-
chises with our used-car superstores; and,
for their support.
nities should yield solid proﬁtability for CarMax.
• the exit of a signiﬁcant competitor from the
used-car superstore business. LEADERSHIP CHANGES
In December, we announced a succession plan
As we enter ﬁscal 2001, we continue to devote
as we prepared for me to leave the day-to-day
our energies to our existing markets. Transforming
operations of the company. Effective in June 2000,
the car-buying experience to make it dramatically
Richard L. Sharp
Alan McCollough, currently president and chief
easier for the consumer remains the cornerstone
Chairman and Chief Executive Ofﬁcer
operating ofﬁcer, will add the title of chief execu-
of the CarMax concept. CarMax locations in Circuit City Stores, Inc.
tive ofﬁcer. In his expanded role,Alan will lead
single-store markets and in the Atlanta and April 6, 2000
our Circuit City and CarMax businesses. Alan is a
Washington/Baltimore multi-store markets are
12-year Circuit City veteran. As general manager
producing outstanding results consistent with
of corporate operations,president of our central
their history and our initial expectations for
operating division and senior vice president of
the CarMax concept. Our used-car locations
CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
The new digital cycle with its full-featured, often
complex, technologies creates an ideal opportunity for
Circuit City. A long history of sales training, a national
store base and alliances with industry-leading vendors
will help position us at the forefront of this cycle.
W. ALAN MCCOLLOUGH
cable modems provide Internet access up to 50
Fiscal 2000 was the second full year DVD players
Our company is entering an exciting period.
times faster than the standard telephone modem.
were available. With attractive entry prices as
At Circuit City, the focus is on the future. We are
Similar capabilities using telephone-based digital
low as $159, the industry sold three times as
entering the new decade in a strong ﬁnancial
subscriber lines are now available, and we expect
many units in calendar 1999 as in 1998. As we
position,with a long heritage of customer service
broadband access via satellite in the near future.
introduce more brands and features, such as
and a continuing commitment to knowledgeable
Once again,our customers will be faced with
multi-disc changers that allow a single unit to
sales assistance. We will build on this foundation,
multiple digital product and service options, and
serve as both a primary CD player and DVD
introducing consumers to new products with
our professional sales Associates will be available
player,consumer appeal will expand signiﬁcantly.
new capabilities and revamping our merchandise
DIRECTV sales continue rapid growth with
presentations to display, explain and sell a full
In ﬁscal 2000, personal computers remained our
household penetration of direct broadcast
range of products and services. I am particularly
strongest major category despite difﬁcult year-
satellite signals still at only 13 percent. Access
pleased to face the future with talented Associates
over-year comparisons and continued erosion in
to local stations, high-deﬁnition programming
whose number one goal is providing consumers
average retail prices. Advances in technology—
and built-in features such as personal video
the best possible shopping experience.
recording technology and Internet access are PIII, digital imaging, voice recognition, digital
C I R C U I T C I T Y : T H E D I G I TA L AG E
further increasing the functionality of DIRECTV audio recording, to name a few—reinforce our
Fiscal 2000 marked the real beginning of what
and should contribute to continued strong belief that the home ofﬁce category will provide
I believe will be the most exciting time ever
sales growth. further sales and proﬁt increases in ﬁscal 2001.
for Circuit City. Amazing new applications of
Like DIRECTV, wireless communications
digital technology had a positive impact on With advances in technology, digital audio
exempliﬁes the marriage between hardware
products throughout our stores, opening up recording capability is available in both the
capability and service offerings. The consumer’s
new possibilities for consumers. And, I believe consumer electronics and personal computer
choices have exploded and now include numerous
the best is yet to come. categories. Audio CD recorders allow consumers
analog and digital options. Many rate plans to customize CD recordings for personal enjoy-
Last fall, consumers saw for the ﬁrst time
and packages offer long-distance service and ment. With a computer and Internet access,
the extraordinary picture delivered by digital
Internet access. With penetration at only about consumers can download compressed music
televisions, and demand quickly exceeded the
30 percent, the growth opportunity in wireless for playback on a portable MP3 player.
limited industry supply. As digital content
increases and pricing becomes more attractive, In major appliances, we are seeing signiﬁcant
Still in its infancy, broadband Internet access is
we anticipate growing demand for both 4:3 technological and competitive changes.
another product and service combination that
and 16:9 wide-screen sets. Development of Technology is creating ovens that cook faster;
offers new capabilities. In ﬁscal 2000,Circuit City
display technologies such as plasma and liquid front-loading, super-efﬁcient washers; and
became one of the nation’s ﬁrst retailers to sell
crystal hybrids add to the industry’s television refrigerators with digitally controlled temperature
CableLabs-certiﬁed DOCSIS modems. These
sales potential. zones. Our sales remained healthy throughout
4 CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
directly accessible by the customer in these areas. We are exceptionally pleased with our e-commerce
ﬁscal 2000, and we will test a new store concept
Yet even for the most basic products, help is avail- performance, especially during our ﬁrst high-
that may help us build an even more distinctive
able for customers who want it. This year, we will trafﬁc holiday season. And, we continue to
consumer offer in the coming decade.
further expand self-service areas in all our new enhance the site. Beginning in April, all sales
CIRCUIT CITY: MAKING IT EASIER
and remodeled stores. counselors were able to access our Web store
The products are exciting; the opportunity is
inventory from any point-of-sale terminal, and
We will concentrate our ﬁscal 2001 full remodels
enormous. But, this explosion of new products,
customers were able to conveniently access our
in central and south Florida and in Richmond,
services and functionality can be confusing, and
site via our premiere position on AOL’s Shop@
Va. The Superstores in these markets will be
consumers will not tolerate confusion. Our job
locations. While no one can be certain what
dedicated to consumer electronics and personal
is to unravel the complexities of the developing
industry Web sales may be, we are committed
computers, creating a high-energy environment
technology. We start with our longstanding
to providing this option to our customers and
for new technologies and permitting expanded
commitment to customer service and a knowl-
to being the best on the Web in our categories.
assortments of video game hardware and soft-
edgeable sales team. In addition, we are intro-
ware, entertainment and computer software, I look forward to the expanding opportunities
ducing powerful store displays that we believe
peripherals and accessories. All Superstores in our Circuit City business and to working
will maximize sales across all product lines.
opened after the ﬁrst ﬁscal quarter will follow with the exceptional management team and all
In ﬁscal 2001, our planned 25 new stores and
this exciting consumer electronics design. In our Associates who can realize Circuit City’s
all 571 existing Superstores will feature displays
addition, in the remodel markets, we will test a full potential.
designed to highlight the latest advances in
new selling strategy for appliances. In these
technology. These displays will include AOL OUTSTANDING PROGRES S
markets, we will open a limited number of
Internet Centers, part of our strategic alliance AT CA R M A X
stand-alone major appliance stores, which we
with America Online, Inc.; a Sony Memory I also am energized by our opportunities at
believe will increase consumer awareness of our
Stick Interactive Universe to introduce this CarMax. Austin Ligon and the CarMax
appliance selection and provide an improved
portable digital memory device that extends Associates have made enormous strides as we
selling environment for these products.
across a family of products; signiﬁcantly have continued to revolutionize the auto indus-
expanded displays highlighting the latest in try. In a tough, competitive environment, they
digital audio recording technology; redesigned Consistent with our commitment to sell the way exceeded their ﬁnancial goals in ﬁscal 2000,
wireless phone displays that help consumers customers want to buy, in ﬁscal 2000, we became producing a proﬁt for the year. Austin outlines
compare products, features and services; the ﬁrst national brick-and-mortar specialty CarMax’s ﬁscal 2000 accomplishments and
enhanced DVD, DIRECTV and personal video retailer to sell consumer electronics over the objectives for the coming year in his letter.
recording areas to more prominently emphasize Internet. Unlike many competitors, we have
I thank all our Associates as we enter this
the latest video technology; and an expanded tightly integrated our e-Superstore,circuitcity.com,
new decade and focus on building value for
digital television display to accommodate DTV’s with our brick-and-mortar locations.
shareholders in both the Circuit City and
rapidly growing assortment.
We are delivering a combination of in-depth CarMax businesses.
Even as we make it easier for consumers to product comparison information, broad product
understand what these complex new products selection and convenient purchase and delivery
and services can do for them, we recognize that options, including immediate in-store pickup.
some customers require less help with more Approximately 50 percent of our Internet
familiar products. During the second half of shoppers choose the convenience of in-store W. Alan McCollough
President and Chief Operating Ofﬁcer
ﬁscal 2000, we added self-service displays to our pickup for products available in the store and
Circuit City Stores,Inc.
new stores. Telephony products, software,VCRs, on the Web.
April 6, 2000
portable audio products and accessories are
CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
CARMAX PRESIDENT’S LETTER
In fiscal 2000, CarMax made great strides in improving
our operations and better understanding all aspects of
the automotive market. In fiscal 2001, we will focus on
solidifying this foundation in our existing markets.
W. AUSTIN LIGON
While CarMax has continued to improve sales
I am happy to report that CarMax exceeded its competitor who had committed to high-square-
and proﬁtability, our major used-car superstore
ﬁscal 2000 objectives. In February 1999, we footage,high-acreage locations. We moved too
competitor was less successful with their effort
announced plans to slow our rapid geographic quickly, and the pace of our growth resulted in
to copy our store format. Our competitor exited
growth so that we could concentrate on improving 10 signiﬁcantly overbuilt stores.
the used-car superstore business completely at
proﬁtability in under-performing markets and
At CarMax, we now know that most of our
the end of calendar 1999. We believe their exit is
continue building on an already successful
multi-store markets need more, but smaller,
already improving sales by eliminating consumer
foundation in other markets. In ﬁscal 2000,
stores to properly serve their trade areas. We
confusion over our competing store formats
with a balanced focus on adding revenues and
have adopted a hub and satellite strategy that
and allowing CarMax to clearly emerge as the
improving margins, we:
is improving performance in Miami, Tampa,
successful used-car superstore standard.
• increased our vehicle unit, service and
Houston, Dallas and Chicago. In these markets,
we have converted a total of six CarMax CONSUMER ENTHUSIASM
• increased our ﬁnancing and extended warranty
superstores to satellite operations that share The opportunities afforded by making it easier
reconditioning, purchasing and business ofﬁce and more fun for consumers at every step of the
• implemented productivity enhancements
functions with a nearby hub store. While the car-buying process are what led us into the
that improved efﬁciency and reduced costs.
satellite store presents exactly the same offer to business. Our experience convinces us that
These accomplishments improved our pretax the consumer, its annual operating costs are CarMax continues to offer the best shopping
operating results by more than $40 million, much lower, signiﬁcantly improving the prof- experience for the automotive consumer.
bringing us to a proﬁtable position for the year. itability in these multi-store markets. CarMax’s success in single-store markets and in
We believe our improved operating results and the metropolitan multi-store markets of Atlanta,
The satellite prototype calls for a display capacity
continued changes in the competitive land- Washington and Baltimore and the rising volumes
of 250 to 400 vehicles on a four- to six-acre site.
scape set the foundation for solid proﬁtability in our other metro markets is clear evidence of
A 12,000- to 14,000-square-foot building houses
in ﬁscal 2001. consumers’ enthusiasm for the CarMax offer.
sales ofﬁces, a showroom and four to seven
CarMax used-car superstores are the highest
service bays for regular maintenance and warranty
volume auto retailing locations in the industry.
service. In the ﬁrst quarter of ﬁscal 2000,we grand-
When we initiated our aggressive national
While the average new-car dealer sells 1,150
opened a prototype satellite superstore, in
expansion plan in June 1996, we had just
new and used vehicles per year, the average
Rockville, Md., enhancing the performance
achieved impressive results in our Norcross,
CarMax superstore sells more than 4,100 used
of the already strong Washington/Baltimore
Ga., superstore—the largest store we had open
vehicles alone per year. Our Laurel, Md., super-
market. In addition, at the end of ﬁscal 2000, we
at that time. We believed that this store model
store produces the largest used-car sales volume
constructed two prototype satellite stores, one in
would be equally successful in other major metro-
in the nation, with used-car sales 20 times the
Dallas and one in Houston.
politan markets. We also were racing to gain
used-car sales of the average dealer.
ﬁrst-entry advantage over another superstore
6 CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
of doing business with CarMax. We know that it was producing 10 percent of our new-car
Market research further validates that CarMax
CarMax store sales are directly correlated with sales transactions.
customers like our unique approach. Ninety
the number of consumer store visits. If we
percent of customers are satisﬁed with their
In ﬁscal 2000, CarMax made great strides in
increase awareness and visits, we increase sales
CarMax experience and would recommend
laying the groundwork for sustaining proﬁtable
CarMax to family and friends.
growth. In ﬁscal 2001, our focus will remain on
In ﬁscal 2000, to increase consumer awareness solidifying this foundation and securing our
We also are achieving success when we extend
in our markets, we launched a new television role as the nation’s leading specialty used-car
the ease of the CarMax buying process to new
advertising campaign focused on the key rea- retailer as well as a growing retailer of new
cars. We are uniformly successful in the sale of
sons to shop at CarMax: cars. We plan to concentrate on our hub and
new cars when our franchises are integrated or
• Low prices satellite strategy in existing markets and to
co-located with CarMax used-car superstores.
• No haggling take advantage of appropriate opportunities
Within their ﬁrst year of operation, our inte-
• Hassle-free ﬁnancing to integrate or co-locate new-car franchises
grated new-car franchises ranked among
• Broad selection with existing used-car superstores. We believe
the leading locations for their brands in the
• Certiﬁed high quality this continued emphasis on revenue growth
markets they serve, and half are number one.
• On-site maintenance and repair service and operating margin enhancement will
Our Norcross, Ga., store in the Atlanta market
• Online prices and daily inventory updates deliver solid proﬁtability in ﬁscal 2001 and
remains the number one Chrysler-Plymouth
allow us to resume moderate and proﬁtable
dealer in the U.S. and has received the Five Star
geographic growth thereafter.
rating, DaimlerChrysler’s highest honor for cus-
At the end of ﬁscal 2000, we continued to
tomer service excellence, for two years in a row.
I want to thank our CarMax Associates for all the
enhance CarMax’s uniquely natural Internet
hard work that made possible the extraordinary
We have been disappointed, however, with the integration. Since 1997, carmax.com has
progress in ﬁscal 2000. Their continuing, enthu-
performance of our stand-alone new-car fran- allowed consumers to search CarMax’s entire
siastic commitment to The CarMax Way is
chises. Although their volumes have improved 10,000 new- and used-car inventory, which is
critical to our success.
signiﬁcantly versus their levels prior to acquisi- updated daily, and see the price and basic
tion, sales remain below our expectations. We description of each vehicle. With the enhance-
are actively pursuing opportunities to integrate ments, they now also can compare any new or
or co-locate as many of these franchises with used vehicles side-by-side, see photographs of
our used-car operations as possible. In January, each vehicle, compare pricing of used cars
we moved our Laurel, Md., Toyota franchise to a with Kelley Blue Book prices, see the MSRP
W. Austin Ligon
site adjacent to the CarMax Auto Superstore in and manufacturer’s invoice price for new cars,
Laurel. The new Laurel Toyota location is the and estimate monthly payments. Earlier in the
ﬁrst facility CarMax has built exclusively to year, we launched our Insta-PriceSM Online
April 6, 2000
sell new cars. The move already has begun to New-Car Buying Service, the ﬁrst online ser-
generate dramatically higher sales volumes. vice to offer ﬁrm prices on all new vehicles.
In addition, we began testing alliances with
With the popularity of the CarMax offer proven
popular online automotive sites that refer
among CarMax customers, our challenge is to
consumers to carmax.com. Our online buying
increase consumer awareness, exposing more
service is staffed by dedicated Internet sales
consumers to The CarMax Way so that they
consultants, and by the end of the ﬁscal year,
fully understand and appreciate the beneﬁts
CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
understand and enjoy
At Circuit City, we are making it
easier for consumers to under-
stand and add new consumer
electronics and personal com-
puting technologies to their lives.
Knowledgeable sales assistance,
compelling product and technol-
ogy demonstrations and in-store
informational displays help
explain the amazing products
and services emerging in today’s
exciting environment of digital
advances. And, we are offering
consumers new ways to shop,
with an expanded assortment of
self-service products in many
stores and a Web site that is fully
integrated with our Superstores
the high quality
New video game platforms and digital
audio recording products such as MP3
offer sales growth opportunities.
Consumers can see the amazing picture quality
of digital television at side-by-side displays.
At Circuit City,
Circuit City’s AOL Internet
technology with Centers demonstrate how the Internet
becomes a part of everyday life through
interactive displays. multiple connecting options.
10 CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
Circuit City is bringing the digital product revolution
to consumers. We believe the result will be a strong,
long-term growth cycle for shareholders.
Information. Given selection and attractive
Broad selection allows consumers to choose the
Circuit City has long led the way in sales of
prices, the key to making shopping easier is
products and services that ﬁt their particular
cutting-edge consumer electronics technologies.
making it easy for consumers to get product
circumstances. Within each product line, our
As the swift pace of technological advances
information. We provide that information
buyers provide an array of brands, products
adds complex products and services to our
through a well-trained, knowledgeable sales
and services that range from the most basic to
selection, Circuit City is making it easier for
force and displays that allow hands-on product
the most feature-rich. We also introduce new
consumers to understand, purchase and incor-
technologies early in their cycle. We were one
porate the beneﬁts of these technologies into
of the ﬁrst retailers, and are today the nation’s
their lives. We achieve this objective by offering
To assure that Circuit City sales counselors are
leading retailer, of DIRECTV.
a full spectrum of merchandise, competitive
up to date with the newest product information,
prices and clear, but comprehensive, product
we emphasize continuous learning that covers
Price. To meet our growth goals, Circuit City
information. Finally, we give consumers the
product and service technologies, customer
must remain price-competitive. The American
ability to shop the way they want to shop—
service and store operations. In ﬁscal 2001, we
retail environment caters to a value-conscious
either in our stores or through the dynamic
will begin to introduce state-of-the-art interac-
consumer. In addition to comparing prices
new medium, the Internet.
tive Web-based training for store, service center
across brick-and-mortar retailers, consumers
and distribution Associates. By maintaining
now can compare prices across a growing
IN THE STORE
and delivering training programs on the Web,
number of Internet retailers. The competitive
Merchandise Selection. Customers have a
we can update training as rapidly as the prod-
nature of the consumer electronics industry
variety of needs. Today, a couple may be
uct cycle develops. Integration with our exist-
means Circuit City customers often ﬁnd store
choosing between an analog big-screen or a
ing store systems adds a quality-control
prices that are lower than prices on a variety
digital-ready television for their family room.
element, ensuring that sales counselors have
of Web sites.
Tomorrow, the same couple may select a
completed required training programs before
13-inch small-screen television for a child’s
interacting with customers. All sales training
bedroom. Whatever the need, we want Circuit
will take place online, saving the time and
City to be their store of choice.
expense of off-site travel. Online access allows
CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
devices such as
Memory Stick allow
today’s products to offer
ease of use in a compact size.
New technology displays
and increased self-service
merchandise displays are
features of our newest
displays help consumers sort
through complex choices.
12 CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
sales counselors to easily and quickly retrieve
The key to making shopping easier
information from training materials or online
is taking the mystery out of technology.
mentors. In short,Web-delivered training is
faster, better and more effective.
Well-trained, knowledgeable sales
counselors and hands-on product
For new, complex technologies, a product
demonstration and explanation of features
demonstrations help Circuit City
and beneﬁts are the best way to help consumers
understand which products and services best
customers understand and purchase
ﬁt their lifestyles. In ﬁscal 2000, new television
the new technologies that are driving
displays gave side-by-side comparisons of
big-screen analog televisions with the newer
digital televisions. In markets where high-speed
cable service is available, customers could see
a demonstration of the features that broad-
We provide factory-authorized repairs at 35
digital video and digital audio displays to
band Internet access provides. And, digital
service centers nationwide and through 1,700
highlight expanding product selections and
imaging displays showed consumers how
trained technicians. Customers simply take the
to edit vacation pictures and e-mail them to
product requiring repair to their closest Circuit
friends and family.
City Superstore, and we express ship it to our
In new and remodeled stores, we are adding
nearest service center. In-home repair service
“take-with” displays where customers easily
Beginning in the summer of 2000, Circuit City
is available for big-screen televisions and
can pick up products they know about right
Superstores will feature AOL Centers offering
major appliances, and a third-party warranty
from the shelves. Today, some customers need
an array of interactive products and services.
provider supplies in-home service for personal
less sales assistance when choosing items such
Circuit City will demonstrate for consumers
as telephones, portable radios and VCRs, which
everything they need for home connectivity,
have high household penetration and relatively
including Internet access via AOL. As broad-
Customers can exchange their products and, if
low prices. And yet, even for these product
band technologies become available through
necessary, receive a refund at any Circuit City
lines, sales assistance is always available if
AOL, we expect to add these demonstrations to
store, even if they have misplaced their receipt.
customers prefer it.
the AOL Centers.
Finally, if a customer has an issue that is not
resolved through our stores or in our product
Service After the Sale. Circuit City’s commit-
Also by the summer of 2000, every Circuit
service centers, he or she has toll-free access
ment to satisﬁed customers does not end with
City Superstore will feature a Memory Stick
to customer service representatives who can
the sale. Circuit City Associates deliver and
Interactive Universe dedicated to introducing
usually quickly resolve the problem.
install televisions, ranges, refrigerators, washers
customers to Sony’s diverse line of Memory
and dryers with the same high level of knowl-
Stick products, including cameras,camcorders,
edge our customers experience in our stores ON THE WEB
printers, portable music players,VAIO personal
and the same commitment to service. More In July 1999,Circuit City launched its e-commerce
computers and Memory Stick media. We also
than 95 percent of our home deliveries occur Web site, extending the Circuit City offer to
are enhancing our wireless communications,
within one day of the product purchase. Internet shoppers and delivering a combination
of options that only a retailer with a national
CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
Customers who order online have
the option of Express Pickup at a
convenient Circuit City Superstore.
with our nationwide
In our test lab, consumers provide valuable input into
the development of circuitcity.com.
Superior customer service is the
number one goal of Associates
throughout our organization.
14 CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
store base can provide. We have tightly integrated
We have tightly integrated circuitcity.com
circuitcity.com with our Circuit City Superstores,
with our Circuit City Superstores. Customers
offering the best of cyber-shopping and tradi-
tional retailing. Our Web site provides the same
can choose to pick up products at the store
commitment to selection, price, information
or have them shipped to their home. Our
and service found in Circuit City stores.
online customers shop with the confidence
Merchandise Selection. At the end of ﬁscal
2000, circuitcity.com offered more than 1,500
and knowledge that Circuit City stands
products for sale and information on more
behind every purchase.
than 2,100 products. We continue to expand
the product selection with plans to add wireless
and broadband services, an expanded assort-
ment of game hardware and a full assortment
Service After the Sale. Circuit City’s online
Superstore on the day of pickup. When the
of game software in ﬁscal 2001.
customers shop with the conﬁdence and
customer goes to the point-of-sale register,
knowledge that Circuit City stands behind
the transaction is automatically checked by
Circuit City gives Internet shoppers the ability
every purchase. Customer service via e-mail is
the register system against the in-store price,
to check the inventory of up to three Circuit City
available seven days a week. If a product needs
and the customer receives the lower price. In
Superstores in their market, as well as the in-
service, online customers can take the product
addition, the e-Superstore offers Web-only
stock availability directly from the e-Superstore.
to their local Superstore where it receives the
specials on items that are not available in
The inventory information is updated every
same factory-authorized repair service avail-
sufﬁcient quantity to supply our nearly 600
day and veriﬁed in real time when the customer
able for in-store purchases. Customers can
chooses to purchase an item. The customer can
exchange or return an e-Superstore product
choose to have the product shipped through
at any Circuit City Superstore location, with
Information. Consumers can ﬁnd in-depth
the e-Superstore for normal shipping costs or
refunds available immediately.
product information on circuitcity.com, begin-
can use the Express Pickup service and avoid
ning with a basic overview of key features and
shipping charges. When a customer chooses
Whether consumers choose to buy in the store
model choices in each product line. In addition,
a product from local store inventory, he or she
or online, Circuit City is committed to being
the overview includes a glossary of terms,
completes the purchase transaction online,
the retailer of choice for consumer electronics,
answers frequently asked questions and provides
and the purchased item is removed from store
personal computers and appliances. Making it
technical details. Consumers then can compare
inventory and reserved for the customer to pick
easier to embrace new technology and to shop
side-by-side the product features and prices
up. Using the Express Pickup feature, customers
for all products will help bring our Circuit City
of as many models as they wish to select. For
can cyber-shop at lunch time and pick up their
customers and our shareholders the rewards of
example, at the end of the ﬁscal year, consumers
purchases on their way home from work.
the digital product revolution.
could compare as many as 35 features of 25
camcorders, 16 features of 17 DVD players, or
Price. Customers who choose the Express
38 features of 116 refrigerators.
Pickup option automatically receive the lower
of the e-Superstore price on the day of their
purchase or the in-store price at their selected
CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
every step of the
At CarMax, we are making it easier
for consumers to buy the car that
is right for them. The CarMax
offer—low, no-haggle pricing;
broad selection; certiﬁed quality
and friendly service—lets our
sales consultants focus on the
customer,not “the deal.” And,these
sales consultants help the cus-
tomer throughout the transaction,
extending our price commitment
to trade-ins, ﬁnancing and
warranties. Shopping for a car
The CarMax Way is shopping
for a car the consumer’s way.
All CarMax customers
receive low prices
Browsing our extensive selection is easy with
our customer-friendly online inventory system.
The CarMax goal:
make buying a car easy.
18 CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
CarMax has set new standards in automobile retailing. In
pricing, in selection, in quality and in service, more and
more consumers are finding their way is The CarMax Way.
every car we appraise, CarMax provides a writ-
Making it easier for consumers at every step of of subcompact, mid-size or luxury cars, sport
ten purchase offer that is good for seven days or
the car-buying process is the core of the CarMax utility vehicles, trucks and minivans. To assure
300 miles. Customers may apply their appraisal
offer. Using what consumers have told us they that the selection reﬂects the preferences of
voucher to a purchase or simply receive a check.
want—in pricing, selection and service— consumers in the market, the majority of our
This process increases the trust between CarMax vehicles are purchased locally, either from con-
CarMax has set new industry standards for the
and the consumer, provides our most important sumers in the market or at regional auctions.
source of used cars and allows us to match our As a result, we are able to offer the brand names
inventory with the tastes of local purchasers. and vehicle models that are in high demand.
PAYING THE RIGHT PRICE
Independent auto industry experts continue to
The same sales consultant who facilitates the car CarMax used cars are less than six years old and
ﬁnd that consumers believe negotiating the right
purchase also explains our no-haggle,competitively have fewer than 60,000 miles. They generally
price is the most difﬁcult and unpleasant part
priced ﬁnancing and warranty programs. For range in price from $6,500 to $30,000. We also
of buying a car. At CarMax, we have solved that
ﬁnancing,the sales consultant simply enters basic offer a selection of top-quality older cars for
problem with low, no-haggle prices at every
credit information directly into the CarMax system. the most cost-conscious consumer. Called
stage of the transaction. On most cars, CarMax
First North American Credit,CarMax’s ﬁnance ValuMax®, these vehicles are either older than
used-car prices average $1,300 below Kelley Blue
operation,and Bank of America provide primary six years or have more than 60,000 miles.
Book prices; more than 80 percent of our new
credit. Customers approved by both sources can Their prices range from $4,000 to $19,000.
cars are priced below manufacturer’s invoice.
see and select from the terms and rates offered.
For both new and used cars, all CarMax cus-
Sub-prime ﬁnancing is available from a variety of In addition to selling used cars, CarMax operates
tomers receive these competitively low prices
third-party lenders. Warranty terms and rates also 20 new-car franchises. Fifteen are integrated or
without having to negotiate. Best of all, with
are provided online,and the customer sees and co-located with CarMax used-car superstores.
low, no-haggle pricing, CarMax sales consultants
selects from the available choices. Five franchises operate as stand-alone new-car
can focus solely on helping customers ﬁnd the
locations. As with used cars, CarMax employs its
vehicles that meet their individual needs.
low-price, no-haggle selling process with new
FINDING THE RIGHT CAR
cars. At all new-car locations, the full selection of
As part of the no-haggle philosophy, trade-ins CarMax superstores offer consumers the broadest
the manufacturer’s models is available. CarMax
are handled as a separate transaction. In fact, selection in the used-car industry. Consumers
new-car franchises include Chrysler, Plymouth,
consumers may sell their car to CarMax whether may select from as many as 600 used cars on a
they are buying a car from us or not. On virtually single CarMax lot, choosing from a wide variety
CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
customers find compre-
hensive information and
prices on each vehicle
from the comfort of their
home. The 10,000-vehicle
inventory is updated daily.
CarMax certifies the quality of
each vehicle following a thorough
inspection and reconditioning.
CarMax Associates are setting
a new industry standard by giving
consumers what they have asked
for in a car-buying experience.
20 CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT