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Alan McCollough

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The industry trends and our own initiatives resulted in strong sales of new technologies such as digital and thin-panel televisions, portable DVD players, digital satellite systems and portable digital audio,

Sales were particularly strong in those categories that were expanded following last year's exit from the appliance business and which seasonally peak in December, ... These categories include video game hardware, software and accessories; digital cameras; personal computer software and accessories; and DVD software.

Although December sales started relatively strong and picked up at the end of the month, we were not able to offset mid-month weakness, ... For the full month, traffic was up slightly, but not at the level of improvement we experienced in November.

We believe the December sales performance reflects not only our continued need to update the store base, but also a need to increase the average ticket and to drive more traffic, exposing a broader base of consumers to the new Circuit City,

During the second quarter, we moved forward on a number of fronts. We're pleased with returning to second-quarter profitability for the first time in five years.

We were obviously dissatisfied with the overall comparable-store sales decline,

With Circuit City's E-superstore, customers will find convenient and money-saving options not available from Web-only retailers, ... We believe the tight integration of the Circuit City Web site and our superstores gives the customer the best of both worlds.

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