Circuit City Stores, Inc. reported results for the second quarter ended Aug. 31, 2006. Net sales grew 11.0 percent, driven by a comparable store sales gain of 8.3 percent. Domestic segment Web-originated sales grew 74 percent over the prior year. Gross profit margin was flat compared with last year's result. For the domestic segment, a modest decline in merchandise margin was offset by a margin contribution from net financing. SG&A expenses as a percentage of sales declined 44 basis points from the prior year, driven by a 31 basis point improvement in the domestic segment.
The domestic segment improvement was driven by leverage of payroll as well as rent and occupancy expenses. The improvement in the international segment SG&A expense-to-sales ratio contributed 13 basis points to the consolidated improvement. Earnings from continuing operations before income taxes were 0.7 percent of sales compared with 0.2 percent of sales in the prior year. The company reported net earnings from continuing operations of U.S. $0.07 per diluted share compared with $0.02 per diluted share in the prior year.
For the second quarter ended Aug. 31, 2006, net sales increased 11.0 percent to $2.84 billion from $2.56 billion in the same period last year, with consolidated comparable store sales increasing 8.3 percent from the prior year.
For the second quarter, net sales for the domestic segment increased 11.0 percent to $2.68 billion from $2.41 billion in the same period last year, with comparable store sales increasing 8.9 percent from the prior year. For the quarter, domestic segment Web-originated sales grew 74 percent, and domestic segment services revenues grew 100 percent over the prior year. During the second quarter, the domestic segment opened two incremental Superstores.
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