COMPANY REPORT: 2/8/2003
Circuit City Stores
Ticker: CC
Exchange: NYSE
Price: $4.87(2/7 close)
Market Cap: 1055 (millions)
PE Ratio: 7.72
Shares Outstanding: 210.527 (million)
2002 sales: $12.7 billion
Net Income: $218.8 million
Book Value per share: $10.72
Website: www.circuitcity.com
Phone: 804-527-4000

THE COMPANY
Circuit City is the second largest electronics specialty discount retailer in the U.S., with more than 600 stores. The retail electronics business is extremely competitive, especially in this price-cutting, seemingly deflationary economy we are mired in. The field is crowded with competitors such as Best Buy. Other companies such as Wal-Mart, and Amazon which don't specialize in this area, also have a piece of the pie.

RECENT NEWS/PERFORMANCE
Neither has been good. This week, the company announced layoffs of 2000, a new compensation structure to cut costs, and that 4th quarter earnings would be below expectations. A year ago, the stock was around $20, and now trades at less than $5.
Current P/E is less than 7, but that does not tell the whole story (it seldom does). Although the company is still profitable, it;s profit margins are eroding.

POTENTIAL CATALYSTS
Increase in consumer spending
Resolution of Iraq situation
Improving economy
Competitors going under
Pricing Power

THE NCAV STORY
Circuit City is currently the largest company (by market cap) trading below its NCAV.

Current Assets: 3631(million)
Current Liabilities: 1903
LT Debt: 12
Other LT Liabilities: 159
NCAV: 1558
MKT Cap: 1055
NCAV/MKT cap: 1.48 (ratio of NCAV to Mkt cap)

If this company has anything going for it as far as NCAV goes, its the fact that it has a lot of cash. While inventory is the largest component of current assets, that is par for the course for a retailer.

COMPOSITION OF CURRENT ASSETS
Cash:438(million)
Inventory: 2375
Receivables: 231
Other:587
Cash Per Share:$2.09

Fixed Assets: 693 (million)

This is a company to watch. It has a tough road ahead of it, but balance sheet is strong. The company has little debt, and more than $2 per share in cash. It is a very difficult environment for this type of company, but keep your eye on the economy.