UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q


             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the Quarterly Period Ended November 30, 2000

                          Commission File Number 1-5767


                            CIRCUIT CITY STORES, INC.
             (Exact Name of Registrant as Specified in its Charter)

               VIRGINIA                                 54-0493875
               --------                                 ----------
       (State of Incorporation)                      (I.R.S. Employer
                                                     Identification No.)

                  9950 MAYLAND DRIVE, RICHMOND, VIRGINIA 23233
              (Address of Principal Executive Offices and Zip Code)

                                 (804) 527-4000
              (Registrant's Telephone Number, Including Area Code)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

          Yes    X                                 No
              -------                                 ------

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.


 


                                     Class                                          Outstanding at December 31, 2000
-----------------------------------------------------------------------------       --------------------------------
Circuit City Stores, Inc. - Circuit City Group Common Stock, par value $0.50                   205,756,655
Circuit City Stores, Inc. - CarMax Group Common Stock, par value $0.50                          25,646,766


An Index is included on Page 2 and a separate  Index for Exhibits is included on
Page 38.


                   CIRCUIT CITY STORES, INC. AND SUBSIDIARIES

                                      INDEX

                                                                                                 Page
                                                                                                  No.
PART I.        FINANCIAL INFORMATION

      Item 1.  Financial Statements:
               ---------------------

               Consolidated Financial Statements:

                  Consolidated Balance Sheets -
                  November 30, 2000, and February 29, 2000                                         4

                  Consolidated Statements of Operations-
                  Three Months and Nine Months Ended November 30, 2000, and 1999                   5

                  Consolidated Statements of Cash Flows -
                  Nine Months Ended November 30, 2000, and 1999                                    6

                  Notes to Consolidated Financial Statements                                       7

               Circuit City Group Financial Statements:

                  Circuit City Group Balance Sheets -
                  November 30, 2000, and February 29, 2000                                        18

                  Circuit City Group Statements of Operations-
                  Three Months and Nine Months Ended November 30, 2000, and 1999                  19

                  Circuit City Group Statements of Cash Flows -
                  Nine Months Ended November 30, 2000, and 1999                                   20

                  Notes to Circuit City Group Financial Statements                                21

               CarMax Group Financial Statements:

                  CarMax Group Balance Sheets -
                  November 30, 2000, and February 29, 2000                                        30

                  CarMax Group Statements of Operations -
                  Three Months and Nine Months Ended November 30, 2000, and 1999                  31

                  CarMax Group Statements of Cash Flows -
                  Nine Months Ended November 30, 2000, and 1999                                   32

                  Notes to CarMax Group Financial Statements                                      33

      Item 2.  Management's Discussion and Analysis:
               -------------------------------------

                  Circuit City Stores, Inc. Management's Discussion and Analysis
                  of Financial Condition and Results of Operations                                12

                  Circuit City Group Management's Discussion and Analysis
                  of Financial Condition and Results of Operations                                24

                  CarMax Group Management's Discussion and Analysis
                  of Financial Condition and Results of Operations                                35


                                  Page 2 of 39

      Item 3.  Quantitative and Qualitative Disclosures about Market Risk:
               ----------------------------------------------------------

                  Circuit City Stores, Inc. Quantitative and Qualitative Disclosures
                  About Market Risk                                                               17

                  Circuit City Group Quantitative and Qualitative Disclosures
                  About Market Risk                                                               29

                  CarMax Group Quantitative and Qualitative Disclosures
                  About Market Risk                                                               37


PART II.          OTHER INFORMATION


      Item 6.     Exhibits and Reports on Form 8-K                                                38


                                  Page 3 of 39


 

                       PART I. FINANCIAL INFORMATION
                       ITEM 1. FINANCIAL STATEMENTS

                   CIRCUIT CITY STORES, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                    (Amounts in thousands except share data)

                                                                   Nov. 30, 2000         Feb. 29, 2000
                                                                    (Unaudited)

ASSETS
Current assets:
Cash and cash equivalents                                         $      121,868        $     643,933
Net accounts receivable                                                  564,832              593,276
Inventory                                                              2,653,440            1,689,209
Prepaid expenses and other current assets                                102,493               16,197
                                                                  --------------        -------------

Total current assets                                                   3,442,633            2,942,615

Property and equipment, net                                            1,021,973              965,181
Other assets                                                              44,510               47,552
                                                                  --------------        -------------

TOTAL ASSETS                                                      $    4,509,116        $   3,955,348
                                                                  ==============        =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt                            $      132,354        $     177,344
Accounts payable                                                       1,504,541              960,131
Short-term debt                                                          151,386                3,005
Accrued expenses and other current liabilities                           157,333              204,561
Deferred income taxes                                                     65,468               61,118
                                                                  --------------        -------------

Total current liabilities                                              2,011,082            1,406,159

Long-term debt, excluding current installments                           118,105              249,241
Deferred revenue and other liabilities                                   106,336              130,020
Deferred income taxes                                                     23,586               27,754
                                                                  --------------        -------------

TOTAL LIABILITIES                                                      2,259,109            1,813,174
                                                                  --------------        -------------

Stockholders' equity:

Circuit City Group common stock, $0.50 par value;
     350,000,000 shares authorized; 205,638,000 shares
     issued and outstanding as of November 30, 2000                      102,819              101,934
CarMax Group common stock, $0.50 par value;
     175,000,000 shares authorized; 25,646,000 shares
     issued and outstanding as of November 30, 2000                       12,823               12,807
Capital in excess of par value                                           636,618              576,574
Retained earnings                                                      1,497,747            1,450,859
                                                                  --------------        -------------

TOTAL STOCKHOLDERS' EQUITY                                             2,250,007            2,142,174
                                                                  --------------        -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $    4,509,116        $   3,955,348
                                                                  ==============        =============

See accompanying notes to consolidated financial statements.

                                  Page 4 of 39

                   CIRCUIT CITY STORES, INC. AND SUBSIDIARIES
                Consolidated Statements of Operations (Unaudited)
                  (Amounts in thousands except per share data)

 
                                                                 Three Months Ended                    Nine Months Ended
                                                                    November 30,                         November 30,
                                                              2000               1999              2000               1999
                                                         --------------     --------------      ------------     --------------
Net sales and operating revenues                         $    2,887,269     $    2,984,607     $   9,141,901     $    8,633,983
Cost of sales, buying and warehousing                         2,305,141          2,313,697         7,174,720          6,692,063
Appliance exit costs                                                  -                  -            28,326                  -
                                                         --------------     --------------     -------------     --------------
Gross profit                                                    582,128            670,910         1,938,855          1,941,920
                                                         --------------     --------------     -------------     --------------

Selling, general and administrative expenses                    677,853            581,216         1,829,357          1,653,710
Appliance exit costs                                                  -                  -             1,670                  -
Interest expense                                                  5,061              6,504            14,865             17,098
                                                         --------------     --------------     -------------     --------------
Total expenses                                                  682,914            587,720         1,845,892          1,670,808
                                                         --------------     --------------     -------------     --------------

(Loss) earnings from continuing operations
    before income taxes                                        (100,786)            83,190            92,963            271,112
Income tax (benefit) provision                                  (38,299)            31,612            35,325            103,023
                                                         --------------     --------------     -------------     --------------
(Loss) earnings from continuing operations                      (62,487)            51,578            57,638            168,089
                                                         --------------     --------------     -------------     --------------
Discontinued operations:
    Loss from discontinued operations of
       Divx, less income tax benefit                                  -                  -                 -            (16,215)
    Loss on disposal of Divx, less
       income tax benefit                                             -                  -                 -           (114,025)
                                                         --------------     --------------     -------------     --------------
Loss from discontinued operations                                     -                  -                 -           (130,240)
                                                         --------------     --------------     -------------     --------------
Net (loss) earnings                                      $      (62,487)    $       51,578     $      57,638     $       37,849
                                                         ==============     ==============     =============     ==============
Net (loss) earnings attributed to:
    Circuit City Group common stock:
       Continuing operations                             $      (64,407)    $       52,335     $      48,057     $      167,425
       Discontinued operations                                        -                 -                  -           (130,240)
    CarMax Group common stock                                     1,920               (757)            9,581                664
                                                         --------------     --------------     -------------     --------------
                                                         $      (62,487)    $       51,578     $      57,638     $       37,849
                                                         ==============     ==============     =============     ==============
Weighted average common shares:
    Circuit City Group basic                                    204,079            201,610           203,569            201,128
                                                         ==============     ==============     =============     ==============
    Circuit City Group diluted                                  204,079            204,525           205,651            204,180
                                                         ==============     ==============     =============     ==============

    CarMax Group basic                                           25,570             23,836            25,546             23,502
                                                         ==============     ==============     =============     ==============
    CarMax Group diluted                                         27,020             23,836            26,965             25,658
                                                         ==============     ==============     =============     ==============

Net (loss) earnings per share:

    Circuit City Group basic:
        Continuing operations                            $        (0.32)     $        0.26      $       0.24     $         0.83
                                                         ==============      =============      ============     ==============
        Discontinued operations                          $            -      $           -      $          -     $        (0.65)
                                                         ==============      =============      ============     ==============
        Net (loss) earnings                              $        (0.32)     $        0.26      $       0.24     $         0.18
                                                         ==============      =============      ============     ==============

    Circuit City Group diluted:
        Continuing operations                            $        (0.32)    $         0.26     $        0.23     $         0.82
                                                         ==============     ==============     =============     ==============
        Discontinued operations                          $            -     $            -     $           -     $        (0.64)
                                                         ==============     ==============     =============     ==============
        Net (loss) earnings                              $        (0.32)    $         0.26     $        0.23     $         0.18
                                                         ==============     ==============     =============     ==============

    CarMax Group basic                                   $         0.08     $        (0.03)    $        0.38     $         0.03
                                                         ==============     ==============     =============     ==============
    CarMax Group diluted                                 $         0.07     $        (0.03)    $        0.36     $         0.03
                                                         ==============     ==============     =============     ==============

Dividends paid per common share:
    Circuit City Group common stock                      $       0.0175     $       0.0175     $      0.0525     $       0.0525
                                                         ==============     ==============     =============     ==============
    CarMax Group common stock                            $            -     $            -     $           -     $            -
                                                         ==============     ==============     =============     ==============

See accompanying notes to consolidated financial statements.

                                  Page 5 of 39




 
                   CIRCUIT CITY STORES, INC. AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (Unaudited)
                             (Amounts in thousands)


                                                                                            Nine Months Ended
                                                                                              November 30,
                                                                                       2000                  1999
                                                                                  --------------        -------------
Operating Activities:
Net earnings                                                                      $       57,638        $      37,849
Adjustments to reconcile net earnings to net cash
    used in operating activities of continuing operations:
    Loss from discontinued operations                                                          -               16,215
    Loss on disposal of discontinued operations                                                -              114,025
    Depreciation and amortization                                                        105,648              106,594
    Gain on sales of property and equipment                                               (2,630)                (238)
    Provision for deferred income taxes                                                      182               33,734
    Changes in operating assets and liabilities, net of effects
       from business acquisitions:
       Decrease in deferred revenue and other liabilities                                 (3,684)             (25,119)
       Decrease (increase) in net accounts receivable                                     28,464              (74,316)
       Increase in inventory                                                            (963,431)            (881,178)
       (Increase) decrease in prepaid expenses and other current assets                  (86,293)              13,095
       Decrease in other assets                                                            1,286                5,481
       Increase in accounts payable, accrued expenses and
          other current liabilities                                                      529,290              427,229
                                                                                  --------------        -------------
Net cash used in operating activities of continuing operations                          (333,530)            (226,629)
                                                                                  --------------        -------------

Investing Activities:
Cash used in business acquisitions                                                        (1,325)             (34,849)
Purchases of property and equipment                                                     (244,027)            (184,219)
Proceeds from sales of property and equipment                                             86,327               61,116
                                                                                  --------------        -------------
Net cash used in investing activities of continuing operations                          (159,025)            (157,952)
                                                                                  --------------        -------------

Financing Activities:
Proceeds from issuances of short-term debt, net                                          148,381              280,376
Principal payments on long-term debt                                                    (176,126)              (1,198)
Issuances of Circuit City Group common stock, net                                         32,497               11,724
Issuances of CarMax Group common stock, net                                                  129                1,814
Dividends paid on Circuit City Group common stock                                        (10,750)             (10,646)
                                                                                  --------------        -------------
Net cash (used in) provided by financing activities of
    continuing operations                                                                 (5,869)             282,070
                                                                                  --------------        -------------

Cash used in discontinued operations                                                     (23,641)             (87,524)
                                                                                  --------------        -------------

Decrease in cash and cash equivalents                                                   (522,065)            (190,035)
Cash and cash equivalents at beginning of year                                           643,933              265,880
                                                                                  --------------        -------------
Cash and cash equivalents at end of period                                        $      121,868        $      75,845
                                                                                  ==============        =============


See accompanying notes to consolidated financial statements.

                                  Page 6 of 39

                   CIRCUIT CITY STORES, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1.   Basis of Presentation
     ---------------------

     The common stock of Circuit City Stores, Inc. consists of two series, which
     are intended to reflect the  performance  of the Company's two  businesses.
     The Circuit City Group Common Stock is intended to track the performance of
     the  Circuit  City  store-related  operations,  the  Circuit  City  Group's
     retained  interest  in the CarMax  Group and the  Company's  investment  in
     Digital Video Express, which has been discontinued (see Note 8). The CarMax
     Group  Common  Stock is  intended  to track the  performance  of the CarMax
     Group's operations.  The Circuit City Group held a 74.6 percent interest in
     the CarMax Group at November 30, 2000, a 74.7 percent  interest at February
     29, 2000, and a 75.8 percent interest at November 30, 1999.

     Notwithstanding  the attribution of the Company's  assets and  liabilities,
     including  contingent  liabilities,  and  stockholders'  equity between the
     Circuit City Group and the CarMax Group for the purposes of preparing  each
     Group's  financial  statements,  holders of Circuit City Group Common Stock
     and holders of CarMax Group Common  Stock are  shareholders  of the Company
     and are subject to all of the risks  associated  with an  investment in the
     Company and all of its businesses, assets and liabilities. Such attribution
     does not affect title to the assets or  responsibility  for the liabilities
     of the Company or any of its  subsidiaries.  The results of  operations  or
     financial  condition of one Group could affect the results of operations or
     financial  condition  of  the  other  Group.  Accordingly,   the  Company's
     consolidated  financial  statements  included  herein  should  be  read  in
     conjunction with the financial  statements of each Group and with the notes
     to the consolidated and Group financial  statements  included herein and in
     the Company's SEC filings, including its annual report on Form 10-K and its
     registration statement on Form 8-A.

2.   Accounting Policies
     -------------------

     The consolidated  financial  statements of the Company conform to generally
     accepted accounting principles. The interim period financial statements are
     unaudited;   however,  in  the  opinion  of  management,   all  adjustments
     (consisting  only of normal,  recurring  adjustments)  necessary for a fair
     presentation  of the interim  consolidated  financial  statements have been
     included.  The fiscal year-end  balance sheet data was derived from audited
     financial statements.

                                  Page 7 of 39

 
3.   (Loss) Earnings per Share
     -------------------------

     Reconciliations  of the  numerator  and  denominator  of basic and  diluted
     (loss) earnings per share are presented below:

                                                                         Three Months Ended                 Nine Months Ended
     (Amounts in thousands                                                  November 30,                      November 30,
     except per share data)                                            2000            1999              2000            1999
     --------------------------------------------------------------------------------------------------------------------------
     Circuit City Group:
     Weighted average common shares.............................      204,079         201,610           203,569         201,128
     Dilutive potential common shares:
        Options.................................................            -           2,092             1,167           2,216
        Restricted stock........................................            -             823               915             836
                                                                  ---------------------------       ---------------------------
     Weighted average common shares and
        dilutive potential common shares........................      204,079         204,525           205,651         204,180
                                                                  ===========================       ===========================

     (Loss) earnings from continuing operations
        available to common shareholders........................  $   (64,407)    $    52,335       $    48,057     $   167,425
     Basic (loss) earnings per share from continuing
         operations.............................................  $     (0.32)    $      0.26        $     0.24     $      0.83
     Diluted (loss) earnings per share from continuing
        operations..............................................  $     (0.32)    $      0.26        $     0.23     $      0.82

     CarMax Group:
     Weighted average common shares.............................       25,570          23,836            25,546          23,502
     Dilutive potential common shares:
        Options.................................................        1,386               -             1,314           1,981
        Restricted stock........................................           64               -               105             175
                                                                  ---------------------------       ---------------------------
     Weighted average common shares and
        dilutive potential common shares........................       27,020          23,836            26,965          25,658
                                                                  ===========================       ===========================

     Net earnings (loss) available to
        common shareholders.....................................  $     1,920     $      (757)      $     9,581     $       664
     Basic net earnings (loss) per share........................  $      0.08     $     (0.03)      $      0.38     $      0.03
     Diluted net earnings (loss) per share......................  $      0.07     $     (0.03)      $      0.36     $      0.03


     For the  three-month  period ended  November 30, 2000,  options to purchase
     9,922,445  shares of Circuit City Group Common Stock at prices ranging from
     $9.09  to  $47.53  per  share  were  outstanding  and not  included  in the
     calculation  of  diluted  loss per share  because  they  would  have had an
     antidilutive effect as a result of a loss from continuing  operations.  For
     the three-month  period ended November 30, 1999,  options to purchase 2,000
     shares  of  Circuit  City  Group  Common  Stock at $43.03  per  share  were
     outstanding  and not included in the  calculation  of diluted  earnings per
     share  because the options'  exercise  prices were greater than the average
     market price of the common shares.

     For the  three-month  period ended  November 30, 2000,  options to purchase
     1,365,025  shares of CarMax Group Common Stock at prices ranging from $6.06
     to $16.31 per share were outstanding and not included in the calculation of
     diluted net earnings per share  because the options'  exercise  prices were
     greater  than the  average  market  price  of the  common  shares.  For the
     three-month  period ended November 30, 1999,  options to purchase 4,824,235
     shares of CarMax Group Common Stock at prices  ranging from $0.22 to $16.31
     per share were  outstanding  and not included in the calculation of diluted
     net loss per share because they would have had an antidilutive  effect as a
     result of a net loss.

                                  Page 8 of 39

4.   Gain or Loss on Securitizations
     -------------------------------

     For transfers of receivables that qualify as sales, the Company  recognizes
     gains or losses as a component of the Company's finance operations. For the
     three-month  period ended November 30, 2000, the change in the Circuit City
     Group's  retained  interests  of credit card  securitizations  consisted of
     originated interests of $11.2 million,  less amortization of $11.2 million.
     For the same period last fiscal year, the change in the retained  interests
     consisted of originated  interests of $9.7 million,  less  amortization  of
     $9.8 million. For the nine-month period ended November 30, 2000, the change
     in the  retained  interests  consisted  of  originated  interests  of $34.3
     million,  less  amortization  of $36.5  million.  For the same  period last
     fiscal  year,  the change in retained  interests  consisted  of  originated
     interests of $27.5 million, less amortization of $29.5 million.

     For the three-month  period ended November 30, 2000, the change in retained
     interests of automobile loan securitizations for the CarMax Group consisted
     of originated interests of $6.9 million, less amortization of $4.6 million.
     For the same period last fiscal year, the change in the retained  interests
     consisted of originated  interests of $0.6 million,  less  amortization  of
     $3.3 million. For the nine-month period ended November 30, 2000, the change
     in retained interests  consisted of originated  interests of $19.9 million,
     less  amortization of $11.9 million.  For the same period last fiscal year,
     the  change  consisted  of  originated  interests  of  $9.4  million,  less
     amortization of $9.3 million.

5.   Interest Rate Swaps
     -------------------

     On behalf of the CarMax Group,  during the quarter the Company entered into
     two 40-month amortizing swaps with a total notional amount of approximately
     $171 million  related to automobile loan  receivable  securitizations.  The
     total notional  amount of the CarMax swaps was $773 million at November 30,
     2000, and $327 million at February 29, 2000.  These swaps were entered into
     as part of the sales of  receivables  and are,  therefore,  included in the
     gain or loss on sales of receivables.

6.   Appliance Exit Costs
     --------------------

     On July 25, 2000, the Company  announced  plans to exit the major appliance
     category in all Circuit City stores.  This  decision  reflects  significant
     sales weakness and increased  competition in the major  appliance  category
     and management's sales and earnings  expectations for its new store design.
     To exit the  appliance  business,  the Company will close six  distribution
     centers by  December  31,  2000,  and expects to close two more by July 31,
     2001. The Company also expects to close seven service operations by the end
     of the fiscal year,  and one more by June 30,  2001.  The majority of these
     properties  are leased.  The Company is in the process of  marketing  these
     properties  to be subleased.  Circuit City will  maintain  control over its
     in-home  major  appliance  repair   business,   although  repairs  will  be
     subcontracted  to an unrelated third party. In the second quarter of fiscal
     2001,  the  Company  recorded  appliance  exit  costs of $30  million.  The
     majority  of these  expenses  are  included  in cost of sales,  buying  and
     warehousing on the statements of operations.

     Of the total exit  costs,  $4.4  million  relates to  employee  termination
     benefits.  As of November 30, 2000,  approximately  350  employees had been
     terminated and approximately 650 additional employees will be terminated as
     locations close or consolidate.  These reductions will take place mainly in
     the service, distribution and merchandising functions. Because severance is
     being  paid to  employees  on a  bi-weekly  schedule  subsequent  to  their
     termination,  cash  payments  lag job  eliminations.  The exit  costs  also
     include $17.8 million for lease termination costs and $5.0 million,  net of
     salvage value, for the write-down of fixed assets.

 
                                                                                             Expenses             Liability at
                                                   Original           Adjustments         Paid or Assets           November 30,
     (Amounts in millions)                         Estimate           to Estimate           Written Off               2000
     -----------------------------------------------------------------------------------------------------------------------------
     Lease Termination Costs...................     $  17.8              $   -                  $ 0.1               $ 17.7
     Fixed Asset Write-Downs...................         5.0                  -                    5.0                    -
     Employee Termination Benefits.............         4.4                  -                    0.4                  4.0
     Other.....................................         2.8                  -                    2.8                    -
                                                  --------------------------------------------------------------------------------
     Appliance Exit Costs......................     $  30.0              $   -                  $ 8.3               $ 21.7
                                                  ================================================================================



                                  Page 9 of 39

7.   Operating Segment Information
     -----------------------------

     The Company conducts business in two operating  segments:  Circuit City and
     CarMax.  These  segments are identified and managed by the Company based on
     the different products and services offered by each. Circuit City refers to
     the retail  operations  bearing  the  Circuit  City name and to all related
     operations,  such as the  Circuit  City  Group's  finance  operation.  This
     segment  is  engaged  in  the  business  of  selling  brand-name   consumer
     electronics,  personal computers and entertainment software.  CarMax refers
     to the used- and new-car  retail  locations  bearing the CarMax name and to
     all  related  operations  such as the  CarMax  Group's  finance  operation.
     Financial  information  for these  segments  for the three- and  nine-month
     periods ended November 30, 2000, and 1999, is presented below.


     Earnings  from  continuing  operations  and total  assets for Circuit  City
     presented  below exclude the  Inter-Group  Interest in the CarMax Group and
     the discontinued Divx operations discussed in Note 8.


 

     Three Months Ended November 30, 2000
                                                                                                            Total Operating
     (Amounts in thousands)                                         Circuit City             CarMax              Segments
     --------------------------------------------------------------------------------------------------------------------------
     Revenues from external customers..........................       $2,325,576            $561,693               $2,887,269
     Interest expense..........................................            2,397               2,664                    5,061
     Depreciation and amortization............................            33,787               4,904                   38,691
     (Loss) earnings from continuing operations
         before income taxes...................................         (112,992)             12,206                 (100,786)
     Income tax (benefit) provision............................          (42,937)              4,638                  (38,299)
     (Loss) earnings from continuing operations................          (70,055)              7,568                  (62,487)
     Total assets..............................................       $3,839,627            $668,993               $4,508,620

     Three Months Ended November 30, 1999
                                                                                                               Total Operating
     (Amounts in thousands)                                         Circuit City             CarMax                Segments
     --------------------------------------------------------------------------------------------------------------------------
     Revenues from external customers..........................       $2,495,649            $488,958               $2,984,607
     Interest expense..........................................            3,696               2,808                    6,504
     Depreciation and amortization............................            34,530               4,358                   38,888
     Earnings (loss) from continuing operations
         before income taxes...................................           88,249              (5,059)                  83,190
     Income tax provision (benefit)............................           33,535              (1,923)                  31,612
     Earnings (loss) from continuing operations................           54,714              (3,136)                  51,578
     Total assets..............................................       $3,562,213            $684,304               $4,246,517

     Nine Months Ended November 30, 2000
                                                                                                               Total Operating
     (Amounts in thousands)                                         Circuit City             CarMax                Segments
     --------------------------------------------------------------------------------------------------------------------------
     Revenues from external customers..........................       $7,280,906          $1,860,995               $9,141,901
     Interest expense..........................................            5,715               9,150                   14,865
     Depreciation and amortization............................            91,598              14,050                  105,648
     Earnings from continuing operations
         before income taxes...................................           32,024              60,939                   92,963
     Provision for income taxes................................           12,169              23,156                   35,325
     Earnings from continuing operations.......................           19,855              37,783                   57,638
     Total assets..............................................       $3,839,627          $  668,993               $4,508,620

                                 Page 10 of 39


     Nine Months Ended November 30, 1999
                                                                                                               Total Operating
     (Amounts in thousands)                                       Circuit City             CarMax                  Segments
     --------------------------------------------------------------------------------------------------------------------------
     Revenues from external customers..........................       $7,123,235          $1,510,748               $8,633,983
     Interest expense..........................................            9,960               7,138                   17,098
     Depreciation and amortization............................            95,429              11,165                  106,594
     Earnings from continuing operations
         before income taxes...................................          266,547               4,565                  271,112
     Provision for income taxes................................          101,288               1,735                  103,023
     Earnings from continuing operations.......................          165,259               2,830                  168,089
     Total assets..............................................       $3,562,213       $     684,304               $4,246,517



8.   Discontinued Operations
     -----------------------

     On June 16,  1999,  Digital  Video  Express  announced  that it would cease
     marketing the Divx home video system and discontinue  operations,  but that
     existing,  registered  customers  would  be  able to view  discs  during  a
     two-year  phase-out  period.  The operating results of Divx and the loss on
     disposal  of  the  Divx  business  have  been  segregated  from  continuing
     operations  and  reported  as  separate  line items,  after  taxes,  on the
     consolidated  statements of operations.  Discontinued  operations also have
     been segregated on the consolidated statements of cash flows. However, Divx
     is not segregated on the consolidated balance sheets.

     The loss on the disposal  includes a provision for  operating  losses to be
     incurred  during the  phase-out  period.  It also includes  provisions  for
     commitments  under licensing  agreements with motion picture  distributors,
     the write-down of assets to net realizable value,  lease termination costs,
     employee severance and benefit costs and other contractual commitments. For
     the quarters ended November 30, 2000, and 1999, and nine-month period ended
     November 30, 2000, the  discontinued  Divx  operations had no impact on the
     earnings of Circuit  City Stores,  Inc. For the nine months ended  November
     30, 1999,  the loss from the  discontinued  Divx  operations  totaled $16.2
     million  after an  income  tax  benefit  of $9.9  million.  The loss on the
     disposal of the Divx business  totaled  $114.0  million after an income tax
     benefit of $69.9 million in that same period.

     The net liabilities of the discontinued  Divx operations,  reflected in the
     accompanying  consolidated  balance  sheets as of November  30,  2000,  and
     February 29, 2000, are comprised of the following:

 

     (Amounts in thousands)                                         Nov. 30, 2000       Feb. 29, 2000
     --------------------------------------------------------------------------------------------------
     Current assets............................................ $             154       $         612
     Property and equipment, net...............................                 -                 513
     Other assets..............................................               342                   -
     Current liabilities.......................................           (28,861)            (32,650)
     Noncurrent liabilities....................................           (15,291)            (35,291)
                                                                -------------------------------------
     Net liabilities of discontinued operations................ $         (43,656)      $     (66,816)
                                                                =====================================



9.   Reclassifications
     -----------------

     Certain  amounts  in prior  years  have been  reclassified  to  conform  to
     classifications adopted in fiscal year 2001.

                                 Page 11 of 39



                                     ITEM 2.

         CIRCUIT CITY STORES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net Sales and Operating Revenues and General Comments
-----------------------------------------------------

For the quarter ended November 30, 2000,  Circuit City Stores,  Inc. total sales
declined 3 percent to $2.89  billion from $2.98  billion in the same period last
year. For the nine months ended November 30, 2000, total sales rose 6 percent to
$9.14  billion from $8.63  billion in the first nine months of last year.  Sales
for the Circuit City business  declined 7 percent for the quarter  because of an
overall softening of sales in virtually all product categories,  including those
not  affected  by the  partial  or full  remodeling  of  virtually  all  stores,
promotional pricing over the Thanksgiving holiday weekend and continued declines
in average retail prices for traditional analog products. Although sales for the
Circuit  City  business  were  soft for the  quarter,  sales of  better-featured
products,  new technologies and the new and expanded  categories that were added
to stores  during the quarter grew  rapidly.  CarMax  continued its strong sales
trend in the third  quarter,  with a 15 percent  increase  over the prior  year.
Management  believes the strong CarMax sales reflect  improved  execution in the
stores,  increased  consumer traffic  generated by an enhanced Web site,  strong
used-car  sales and  effective  inventory  management  during  this  year's fall
model-year changeover.

Comparable  store sales  changes for the third  quarter and first nine months of
fiscal years 2001 and 2000 were as follows:

 


   =========================== ================================= ================================
                                         3rd Quarter                       Nine Months
                               --------------------------------- --------------------------------
                                    FY 01            FY 00           FY 01            FY 00
   --------------------------- ---------------- ---------------- --------------- ----------------
   Circuit City Group               (10%)             5%              (1%)             8%
   --------------------------- ---------------- ---------------- --------------- ----------------
   CarMax Group                      11%              3%              15%             (2%)
   =========================== ================ ================ =============== ================



The comparable  store sales  performance  shown above for the Circuit City Group
includes all merchandise  sales categories in all comparable  stores.  Excluding
stores in central and south Florida,  where full remodels were completed late in
the third quarter, comparable store sales declined 9 percent for the quarter and
remained unchanged for the nine-month period ended November 30, 2000. Comparable
store sales in the major  appliance  category  declined 84 percent for the third
quarter of this year and 36 percent for the nine-month period ended November 30,
2000.  Excluding the appliance  category,  from which the company  completed its
exit in the third quarter, comparable store sales rose 3 percent for the quarter
and 6 percent for the nine months ended November 30, 2000.

During  the first  quarter  of  fiscal  2001,  Circuit  City  removed  the major
appliance category from stores primarily in central and south Florida in advance
of a full remodel of those  stores to focus  solely on the consumer  electronics
and home office  categories.  Circuit City  completed  full remodels of these 26
stores the weekend prior to Thanksgiving  and has now grand-opened 18 new stores
that follow the new  consumer  electronics  and home  office-only  design.  This
design includes a more contemporary look,  expanded  merchandise  selections and
more flexible ways for the consumer to shop.

In late July 2000,  the  Company  announced a plan to  strategically  reposition
itself  exclusively  as a  retailer  of  consumer  electronics  and home  office
products.  The Company  discontinued  the sale of major appliances in all stores
and undertook  partial  remodels to expand the  selection of computer  software,
peripherals and accessories; video game hardware and software; movie titles; and
digital  cameras,  and to add 35mm  cameras  and  accessories.  During the third
quarter,  Circuit City  completed the exit from the  appliance  category and the
partial remodel of 547 stores.

                                 Page 12 of 39

Management  believes  that it has achieved key consumer  objectives in the store
design  introduced in the new and fully remodeled stores and expects to continue
to follow this design for all new Circuit City store  construction in the coming
fiscal year. Circuit City expects to open 15 to 20 new stores and to relocate 10
to 15 stores in the  upcoming  fiscal  year.  However,  the  success  of the new
categories  in the partial  remodels  suggests  that the Company can  strengthen
Circuit City's brand identity and return on investment  with a full remodel that
is less costly and less disruptive than the full remodels  completed this fiscal
year.  Therefore,  in the coming  fiscal  year,  Circuit  City expects to test a
remodel  with an average  cost of  approximately  $1.5  million per store.  This
remodel will achieve similar product adjacencies, product availability, lighting
and signage benefits as in this year's full remodels,  while eliminating  costly
changes that management believes have little short-term impact on sales volumes.
Management  expects  completion time for these remodels to be  approximately  60
days. Circuit City expects to remodel 20 to 25 stores to reflect this new design
in the upcoming fiscal year.

For the Circuit  City  Group,  gross  dollar  sales from all  extended  warranty
programs  were 5.1 percent of sales in the third quarter of fiscal 2001 compared
with 5.5  percent  of sales in the third  quarter  of fiscal  2000.  Third-party
warranty revenue  decreased to 3.9 percent of sales in this year's third quarter
from 4.3  percent in the same  period  last year.  The total  extended  warranty
revenue  that is reported in total sales was 4.0 percent of sales in this year's
third quarter  versus 4.5 percent in the third quarter of last fiscal year.  The
decline  reflects the impact of lower average  retail prices on consumer  demand
for the related  warranties in many  categories,  increased sales of products on
which the Company  does not offer  extended  warranty  programs and the shift in
extended  warranty  sales from Circuit City extended  warranties to  third-party
extended  warranties  over the past five  years.  The gross  profit  margins  on
products sold with extended  warranties are higher than the gross profit margins
on products sold without extended warranties.

CarMax has restarted its expansion  plans and expects to open two superstores in
late fiscal 2002.  In addition,  CarMax  continues to seek  prototype  satellite
stores for its existing multi-store markets.

For the CarMax  Group,  gross dollar sales from all extended  warranty  programs
were 4.1 percent of sales in the third  quarter of fiscal 2001 compared with 3.5
percent in the same period last year.  Third-party warranty revenue increased to
1.8 percent of sales in this year's  third  quarter from 1.5 percent in the same
period last year. The total extended  warranty revenue that is reported in total
sales was 1.8 percent of sales in this year's third  quarter  versus 1.5 percent
in  last  year's   third   quarter.   The  increase  is  a  result  of  enhanced
manufacturers' programs and improved warranty penetration.

The Company's operations, in common with other retailers in general, are subject
to seasonal influences.  Historically,  the Circuit City Group has realized more
of its net sales and net earnings in the final fiscal  quarter,  which  includes
the December  holiday selling season,  than in any other fiscal quarter.  CarMax
stores,  however,  have  experienced  more of their  net  sales in the first two
quarters  of the fiscal  year.  The net  earnings  of any  interim  quarter  are
seasonally  disproportionate  to net  sales  since  administrative  and  certain
operating  expenses  remain  relatively  constant  during  the year.  Therefore,
interim  results should not be relied upon as necessarily  indicative of results
for the entire fiscal year.

Cost of Sales, Buying and Warehousing
-------------------------------------

For Circuit City Stores, Inc., the gross profit margin was 20.2 percent of sales
in the third  quarter  of fiscal  2001  compared  with 22.5  percent in the same
period last year.  For the nine months ended November 30, 2000, the gross profit
margin was 21.2  percent  compared  with 22.5  percent  for the same period last
year.

For the Circuit City Group, the gross profit margin was 22.0 percent of sales in
the third quarter  compared with 24.8 percent in the same period last year.  For
the nine months  ended  November  30,  2000,  the gross  profit  margin was 23.2
percent of sales  compared  with 24.8  percent  for the same  period  last year.
Excluding the appliance  category,  Circuit  City's gross profit margin was 24.1
percent in this year's  third  quarter  compared  with 25.9  percent in the same
period last year and 24.8 percent for the  nine-month  period ended November 30,
2000,  compared  with 25.4  percent for the same period last year.  Thanksgiving
weekend was highly  promotional  and sales of  traditional  products  with lower
year-over-year  average  retail prices  remained  high.  As a result,  the third
quarter gross profit margin, excluding appliances,  was significantly lower than
anticipated.

                                 Page 13 of 39

In addition,  appliance  merchandise markdowns associated with the exit from the
appliance  business  reduced  the gross  margin by $21.0  million in this year's
third quarter and $28.0 million for the nine months ended November 30, 2000. The
gross  profit  margin for the nine months  ended  November  30,  2000,  was also
reduced by $28.3 million of one-time appliance exit costs incurred in the second
fiscal quarter. The one-time costs included lease terminations and related fixed
asset  write-downs,  employee  severance and other related costs.  Excluding the
impact of the appliance  merchandise  markdowns and the one-time  appliance exit
costs,  the gross margin was 22.9 percent of sales in this year's third  quarter
and 24.0 percent for the nine months ended November 30, 2000.

For the CarMax Group, the gross profit margin increased to 12.8 percent of sales
in the third  quarter of fiscal 2001 from 10.8  percent for the same period last
year.  For the nine months  ended  November 30,  2000,  the gross profit  margin
increased  to 13.3 percent  compared  with 11.8 percent for the same period last
year.  By  effectively  managing  its  inventory  through  the  fall  model-year
changeover,  CarMax  significantly  reduced the gross profit margin erosion that
occurred in prior years during this period.  The improved gross profit margin is
a result of that inventory management combined with an increase in sales of used
cars, which carry higher profit margins than new cars.

Selling, General and Administrative Expenses
--------------------------------------------

The Company's selling, general and administrative expense ratio was 23.5 percent
in the third  quarter of fiscal  2001  compared  with 19.5  percent for the same
period last year.  For the  nine-month  period  ended  November  30,  2000,  the
Company's selling,  general,  and administrative  expense ratio was 20.0 percent
compared with 19.2 percent for the same period last year.

For the Circuit City Group,  the  selling,  general and  administrative  expense
ratio for this year's third quarter was 26.7 percent of sales compared with 21.1
percent for the same  period last year.  This ratio  includes  $33.6  million in
costs associated with fully remodeling the stores primarily in central and south
Florida and $30.0 million in costs  related to the partial  remodels to exit the
appliance business.  Excluding these costs, this year's expense ratio would have
been 24.0 percent. Excluding remodeling costs and the estimated sales disruption
during the seven to 10 days of partial remodels, the third quarter expense ratio
would have been 23.6  percent.  The third quarter  ratio,  excluding the remodel
costs and the sales disruption,  reflects  lower-than-anticipated  sales through
much of the quarter. The full remodel costs exceeded  management's  expectations
and  reflect  changes  made to the design  during the  remodeling  process,  the
complexity of completing this first group of remodels and the desire to complete
them prior to Thanksgiving.

For the  nine-month  period  ended  November  30,  2000,  the Circuit City Group
expense  ratio was 22.7 percent  compared  with 20.9 percent for the same period
last year. This ratio includes $41.9 million in remodeling costs for the Florida
stores and $30.0  million in costs  related to the partial  remodels.  Excluding
these costs,  this year's expense ratio would have been 21.7 percent.  Excluding
the  remodeling  costs  and the sales  disruption,  the  expense  ratio was 21.6
percent for the nine-month period ended November 30, 2000.

The CarMax Group's selling, general and administrative expense ratio improved to
10.1  percent of sales in the third  quarter of fiscal 2001  compared  with 11.2
percent of sales for the same period last year. For the nine-month  period ended
November 30, 2000, the expense ratio was 9.5 percent of sales compared with 11.0
percent  for the same  period  last year.  Leverage  from sales  growth and more
efficient advertising expenditures led to the better expense ratio.

(Loss) Earnings from Continuing Operations
------------------------------------------

The loss from  continuing  operations  for Circuit City  Stores,  Inc. was $62.5
million in this year's third quarter  compared with earnings of $51.6 million in
the same  period  last year.  Earnings  from  continuing  operations  were $57.6
million in the first nine months of this year  compared  with $168.1  million in
the same period last year.

Excluding the Inter-Group Interest in the CarMax Group, the loss from continuing
operations  for the Circuit  City Group was $70.1  million in this year's  third
quarter compared with earnings from continuing  operations of $54.7 million last
year.  The loss per share  from  continuing  operations  was 34 cents  this year

                                 Page 14 of 39

compared  with  earnings per share from  continuing  operations of 27 cents last
year.  For the first nine months of this fiscal year,  earnings from  continuing
operations for the Circuit City Group excluding the Inter-Group  Interest in the
CarMax Group were $19.9  million,  or 10 cents per share,  compared  with $165.3
million, or 81 cents per share, in the same period last fiscal year.

Reconciliation  of the  Circuit  City  Group's  (loss)  earnings  per share from
continuing operations is presented below:

 

                                                         Three Months Ended                 Nine Months Ended
                                                           November 30,                        November 30,
                                                        2000            1999                2000          1999
                                                     ----------------------------------------------------------
Circuit City Store Business........................  $  (0.06)        $ 0.27             $  0.52         $ 0.81
Impact of Merchandise Markdowns*...................     (0.06)             -               (0.08)             -
Impact of Appliance Exit...........................         -              -               (0.09)             -
Impact of Florida Remodeling Costs**...............     (0.10)             -               (0.13)             -
Impact of Partial Remodeling Costs**...............     (0.09)             -               (0.09)             -
Impact of Sales Disruption.........................     (0.03)             -               (0.03)             -
Inter-Group Interest in CarMax.....................      0.02          (0.01)               0.13           0.01
                                                     ----------------------------------------------------------

Circuit City Group.................................  $  (0.32)        $ 0.26             $  0.23         $ 0.82
                                                     ==========================================================
* Reflected as a reduction in gross profit margins.
** Reflected as an increase in selling, general and administrative expenses.



The CarMax  Group's net earnings  were $7.6 million in this year's third quarter
compared  with a net loss of $3.1  million in the third  quarter of last  fiscal
year.  The net  earnings  attributed  to the CarMax Group Common Stock were $1.9
million  this year  compared  with a net loss of $757,000  in last year's  third
quarter.  Net  earnings  per share of CarMax  Group Common Stock were 7 cents in
this year's third  quarter  compared with a net loss per share of 3 cents in the
same period last year.  Net earnings for the CarMax Group rose to $37.8  million
in the first  nine  months of this  fiscal  year from $2.8  million  in the same
period last year.  The net earnings  attributed to the CarMax Group Common Stock
increased to $9.6  million from  $664,000 in the first nine months of last year.
Net  earnings  per share of CarMax  Group  Common  Stock rose to 36 cents from 3
cents in the first nine months of last year.

Discontinued Operations
-----------------------

On June 16, 1999,  Digital Video Express announced that it would cease marketing
the Divx home video system and discontinue operations, but existing,  registered
customers would be able to view discs during a two-year  phase-out  period.  The
operating  results of Divx and the loss on  disposal of the Divx  business  have
been segregated from continuing  operations and reported as separate line items,
after  taxes,  on the  consolidated  statements  of  operations  for the periods
presented. Discontinued operations also have been segregated on the consolidated
statements of cash flows.  However,  Divx is not segregated on the  consolidated
balance sheets.

For the third quarter and  nine-month  period ended  November 30, 2000,  and the
quarter ended November 30, 1999, the discontinued  Divx operations had no impact
on the earnings of Circuit City Stores,  Inc. For the nine months ended November
30, 1999, the loss from the discontinued  Divx operations  totaled $16.2 million
after an income tax  benefit of $9.9  million.  The loss on the  disposal of the
Divx  business  totaled  $114.0  million  after an income  tax  benefit of $69.9
million in that same period.  The loss on the disposal  includes a provision for
operating  losses to be incurred during the phase-out  period.  It also includes
provisions  for  commitments  under  licensing  agreements  with motion  picture
distributors,   the  write-down  of  assets  to  net  realizable  value,   lease
termination  costs,  employee  severance and benefit costs and other contractual
commitments.

                                 Page 15 of 39

Net (Loss) Earnings
-------------------

The net loss for Circuit  City  Stores,  Inc.  was $62.5  million in this year's
third  quarter  compared  with net earnings of $51.6  million in the same period
last year. Net earnings were $57.6 million in the first nine months of this year
compared with $37.8 million in the same period last year.

Recent Accounting Pronouncements
--------------------------------

In June 1998,  the  Financial  Accounting  Standards  Board issued  statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities."  SFAS No. 133, as amended by SFAS No. 137 and No. 138,
is effective for quarters for fiscal years  beginning  after June 15, 2000. SFAS
No. 133 standardizes the accounting for derivative instruments and requires that
an entity recognize those items as either assets or liabilities and measure them
at fair value.  The Company does not expect the adoption of SFAS No. 133 to have
a material  impact on its  financial  position,  results of  operations  or cash
flows.

Liquidity and Capital Resources
-------------------------------

At November 30, 2000, total assets were $4.51 billion. The inventory increase of
$964.2  million  from  the  end  of  fiscal  2000  reflects  seasonal  inventory
increases,  the building of inventory for category expansion associated with the
partial  remodels  and the  comparable  store sales  decline in the Circuit City
business. Store construction, including the Circuit City store remodels, and the
purchase  of  inventory  contributed  to a $544.4  million  increase in accounts
payable from the end of fiscal 2000.  In June 2000,  a term loan  totaling  $130
million was  classified  as a current  liability  because it becomes due in June
2001. Although the Company has the ability to refinance this loan, it intends to
repay the debt using existing working capital.

The Circuit City Group's  finance  operation  has a master trust  securitization
facility  for its  private-label  card that allows the  transfer of  receivables
through  private  placement  and the public  market.  The master  trust  vehicle
permits further  expansion of the  securitization  program to meet future needs.
During the quarter, a $300 million,  five-year public securitization  related to
the private-label card matured and was paid off. The Company also entered into a
$275 million, three-year public securitization related to its private-label card
during the  quarter.  As of November 30,  2000,  the master trust  program had a
total  program  capacity of $1.11  billion.  The Circuit  City  Group's  finance
operation  also  has a  master  trust  securitization  facility  related  to its
bankcard  program.  This master trust vehicle permits  further  expansion of the
securitization  program in both the public and private  markets.  As of November
30, 2000,  the bankcard  master trust  program had a total  program  capacity of
$1.64  billion.  The  Company  anticipates  that it will be able to  expand  its
securitization programs to meet future needs.

The Company also has an asset securitization program, operated through a special
purpose subsidiary on behalf of the CarMax Group. This program had a capacity of
$850  million as of November  30,  2000.  The  Company,  on behalf of the CarMax
Group,  also has a public program with a capacity of $378 million as of November
30,  2000.  The  Company  anticipates  that  it  will  be  able  to  expand  its
securitization programs to meet future needs.

The Company generally expects to continue its existing long-term  capitalization
strategy for the balance of the current fiscal year. Management anticipates that
capital  expenditures  will  be  funded  through  a  combination  of  internally
generated   funds,    sale-leaseback    transactions   and   operating   leases.
Securitization  transactions  will be used to finance  growth in credit card and
automobile loan receivables, and the Company anticipates that it will be able to
expand its securitization programs to meet future needs.

At November 30, 2000, the Company maintained $401 million in seasonal lines that
are renewed  annually with various  banks,  as well as a $150 million  revolving
credit facility.

                                 Page 16 of 39


                                     ITEM 3.

             CIRCUIT CITY STORES, INC. QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK


The Company  centrally  manages the  private-label  and bankcard  revolving loan
portfolios of the Circuit City Group's  finance  operation  and the  installment
loan  portfolio  of the CarMax  Group's  finance  operation.  Portions  of these
portfolios are securitized  and,  therefore,  are not presented on the Company's
balance sheet. Interest rate exposure relating to these receivables represents a
market risk  exposure  that the Company has  managed  with  matched  funding and
interest rate swaps.

As of November 30,  2000,  the  private-label  and  bankcard  portfolios  of the
Circuit  City Group had not  changed  significantly  since  February  29,  2000.
However,  as a result of its growth, the CarMax Group's  automobile  installment
loan portfolio had increased.

Total principal  outstanding for fixed-rate  automobile loans at November 30 and
February 29, 2000, was as follows:

(Amounts in millions)                           November 30          February 29
--------------------------------------------------------------------------------
Fixed APR...................................     $ 1,179               $    932

Financing  for  these  receivables  is  achieved  through  asset  securitization
programs  which,  in turn,  issue  both  fixed-  and  floating-rate  securities.
Interest rate exposure is hedged  through the use of interest rate swaps matched
to projected payoffs. Receivables held by the Company for investment or sale are
financed with working capital.  Financings at November 30 and February 29, 2000,
were as follows:

(Amounts in millions)                           November 30          February 29
--------------------------------------------------------------------------------

Fixed-rate securitizations..................    $    378             $    559
Floating-rate securitizations
   synthetically altered to fixed...........         773                  327
Floating-rate securitizations...............           3                    1
Held by the Company:
   For investment*..........................          22                   22
   For sale.................................           3                   23
                                                --------------------------------
Total .....................................     $  1,179             $    932
                                               =================================
* Held by a bankruptcy remote special purpose company

Because  programs are in place to manage interest rate exposure  relating to its
installment loan portfolio,  the Company expects to experience relatively little
impact as interest rates fluctuate.



                           FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements,  which are subject
to risks and  uncertainties.  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 Company's report on Form 10-K for the year ended February 29, 2000.

                                 Page 17 of 39



                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                 CIRCUIT CITY STORES, INC. - CIRCUIT CITY GROUP
                                 Balance Sheets
                             (Amounts in thousands)

 

                                                                  Nov. 30, 2000        Feb. 29, 2000
                                                                   (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                                        $      114,359        $     633,952
Net accounts receivable                                                 456,952              464,023
Merchandise inventory                                                 2,331,287            1,405,617
Prepaid expenses and other current assets                                99,680               13,353
                                                                 --------------        -------------

Total current assets                                                  3,002,278            2,516,945

Property and equipment, net                                             829,207              753,325
Inter-Group Interest in the CarMax Group                                286,580              257,535
Other assets                                                              8,638                9,583
                                                                 --------------        -------------

TOTAL ASSETS                                                     $    4,126,703        $   3,537,388
                                                                 ==============        =============

LIABILITIES AND GROUP EQUITY
Current liabilities:
Current installments of long-term debt                           $       78,797        $      85,735
Accounts payable                                                      1,424,552              884,172
Short-term debt                                                          90,474                1,453
Accrued expenses and other current liabilities                          136,229              184,705
Deferred income taxes                                                    53,228               53,971
                                                                 --------------        -------------

Total current liabilities                                             1,783,280            1,210,036

Long-term debt, excluding current installments                           75,369              127,984
Deferred revenue and other liabilities                                   99,402              122,771
Deferred income taxes                                                    16,067               21,877
                                                                 --------------        -------------

TOTAL LIABILITIES                                                     1,974,118            1,482,668

GROUP EQUITY                                                          2,152,585            2,054,720
                                                                 --------------        -------------

TOTAL LIABILITIES AND GROUP EQUITY                               $    4,126,703        $   3,537,388
                                                                 ==============        =============

See accompanying notes to group financial statements.

                                 Page 18 of 39



 
                 CIRCUIT CITY STORES, INC. - CIRCUIT CITY GROUP
                      Statements of Operations (Unaudited)
                  (Amounts in thousands except per share data)

                                                                 Three Months Ended                    Nine Months Ended
                                                                    November 30,                         November 30,
                                                              2000               1999               2000               1999
                                                         --------------     --------------     -------------     --------------
Net sales and operating revenues                         $    2,325,576     $    2,495,649     $   7,280,906     $    7,123,235
Cost of sales, buying and warehousing                         1,815,127          1,877,467         5,561,415          5,359,819
Appliance exit costs                                                  -                  -            28,326                  -
                                                         --------------     --------------     -------------     --------------
Gross profit                                                    510,449            618,182         1,691,165          1,763,416
                                                         --------------     --------------     -------------     --------------
Selling, general and administrative expenses                    621,044            526,237         1,651,756          1,486,909
Appliance exit costs                                                  -                  -             1,670                  -
Interest expense                                                  2,397              3,696             5,715              9,960
                                                         --------------     --------------     -------------     --------------
Total expenses                                                  623,441            529,933         1,659,141          1,496,869
                                                         --------------     --------------     -------------     --------------
(Loss) earnings from continuing operations
    before income taxes and Inter-Group
    Interest in the CarMax Group                               (112,992)            88,249            32,024            266,547
Income tax (benefit) provision                                  (42,937)            33,535            12,169            101,288
                                                         --------------     --------------     -------------     --------------

(Loss) earnings from continuing operations
    before Inter-Group Interest in the
    CarMax Group                                                (70,055)            54,714            19,855            165,259

Net earnings (loss) related to Inter-Group
    Interest in the CarMax Group                                  5,648             (2,379)           28,202              2,166
                                                         --------------     --------------     -------------     --------------

(Loss) earnings from continuing operations                      (64,407)            52,335            48,057            167,425
                                                         --------------     --------------     -------------     --------------

Discontinued operations:
    Loss from discontinued operations of
       Divx, less income tax benefit                                  -                  -                 -            (16,215)
    Loss on disposal of Divx, less income
       tax benefit                                                    -                  -                 -           (114,025)
                                                         --------------     --------------     -------------     --------------
Loss from discontinued operations                                     -                  -                 -           (130,240)
                                                         --------------     --------------     -------------     --------------

Net (loss) earnings                                      $      (64,407)    $       52,335     $      48,057     $       37,185
                                                         ==============     ==============     =============     ==============

Weighted average common shares:
    Basic:                                                      204,079            201,610           203,569            201,128
                                                         ==============     ==============     =============     ==============
    Diluted:                                                    204,079            204,525           205,651            204,180
                                                         ==============     ==============     =============     ==============

Net (loss) earnings per share:

    Basic:
       Continuing operations                             $        (0.32)    $         0.26     $        0.24     $        0.83
                                                         ==============     ==============     =============     =============
       Discontinued operations                           $            -     $            -     $           -     $       (0.65)
                                                         ==============     ==============     =============     =============
       Net (loss) earnings                               $        (0.32)    $         0.26     $        0.24     $        0.18
                                                         ==============     ==============     =============     =============

    Diluted:
       Continuing operations                             $        (0.32)    $         0.26     $        0.23     $        0.82
                                                         ==============     ==============     =============     =============
       Discontinued operations                           $            -     $            -     $           -     $       (0.64)
                                                         ==============     ==============     =============     =============
       Net (loss) earnings                               $        (0.32)    $         0.26     $        0.23     $        0.18
                                                         ==============     ==============     =============     =============

Dividends paid per common share                          $       0.0175     $       0.0175     $      0.0525     $      0.0525
                                                         ==============     ==============     =============     =============

See accompanying notes to group financial statements.

                                 Page 19 of 39



                 CIRCUIT CITY STORES, INC. - CIRCUIT CITY GROUP
                      Statements of Cash Flows (Unaudited)
                             (Amounts in thousands)

 

                                                                                         Nine Months Ended
                                                                                            November 30,
                                                                                     2000                  1999
                                                                                --------------        -------------
Operating Activities:
Net earnings                                                                    $       48,057        $      37,185
Adjustments to reconcile net earnings to net cash
    used in operating activities of continuing operations:
    Loss from discontinued operations                                                        -               16,215
    Loss on disposal of discontinued operations                                              -              114,025
    Net earnings related to Inter-Group Interest
       in the CarMax Group                                                             (28,202)              (2,166)
    Depreciation and amortization                                                       91,598               95,429
    Gain on sales of property and equipment                                             (2,935)                (157)
    Provision for deferred income taxes                                                 (6,553)              32,307
    Decrease in deferred revenue and other liabilities                                  (3,369)             (26,593)
    Decrease (increase) in net accounts receivable                                       7,091              (43,596)
    Increase in merchandise inventory                                                 (925,670)            (844,701)
    (Increase) decrease in prepaid expenses and other current assets                   (86,324)              15,552
    Decrease in other assets                                                             1,287                4,226
    Increase in accounts payable, accrued expenses
       and other current liabilities                                                   522,909              414,873
                                                                                --------------        -------------
Net cash used in operating activities of continuing operations                        (382,111)            (187,401)
                                                                                --------------        -------------


Investing Activities:
Purchases of property and equipment                                                   (235,875)            (144,227)
Proceeds from sales of property and equipment                                           70,819               52,758
                                                                                --------------        -------------
Net cash used in investing activities of continuing operations                        (165,056)             (91,469)
                                                                                --------------        -------------


Financing Activities:
Increase in allocated short-term debt, net                                              89,021              186,587
Decrease in allocated long-term debt, net                                              (59,553)                (614)
Equity issuances, net                                                                   32,497               11,724
Dividends paid                                                                         (10,750)             (10,646)
                                                                                --------------        -------------
Net cash provided by financing activities of continuing operations                      51,215              187,051
                                                                                --------------        -------------

Cash used in discontinued operations                                                   (23,641)             (87,524)
                                                                                --------------        -------------

Decrease in cash and cash equivalents                                                 (519,593)            (179,343)
Cash and cash equivalents at beginning of year                                         633,952              248,201
                                                                                --------------        -------------
Cash and cash equivalents at end of period                                      $      114,359        $      68,858
                                                                                ==============        =============

See accompanying notes to group financial statements.

                                 Page 20 of 39



                 CIRCUIT CITY STORES, INC. - CIRCUIT CITY GROUP
                       Notes to Group Financial Statements

1.   Basis of Presentation
     ---------------------

     The common stock of Circuit City Stores, Inc. consists of two series, which
     are intended to reflect the  performance  of the Company's two  businesses.
     The Circuit City Group Common Stock is intended to track the performance of
     the  Circuit  City  store-related  operations,  the  Circuit  City  Group's
     retained  interest  in the CarMax  Group and the  Company's  investment  in
     Digital Video Express, which has been discontinued (see Note 6). The CarMax
     Group  Common  Stock is  intended  to track the  performance  of the CarMax
     Group's operations.  The Circuit City Group held a 74.6 percent interest in
     the CarMax Group at November 30, 2000, a 74.7 percent  interest at February
     29, 2000, and a 75.8 percent interest at November 30, 1999.

     Notwithstanding  the attribution of the Company's  assets and  liabilities,
     including  contingent  liabilities,  and  stockholders'  equity between the
     Circuit City Group and the CarMax Group for the purposes of preparing  each
     Group's  financial  statements,  holders of Circuit City Group Common Stock
     and holders of CarMax Group Common  Stock are  shareholders  of the Company
     and are subject to all of the risks  associated  with an  investment in the
     Company and all of its businesses, assets and liabilities. Such attribution
     does not affect title to the assets or  responsibility  for the liabilities
     of the Company or any of its  subsidiaries.  The results of  operations  or
     financial  condition of one Group could affect the results of operations or
     financial  condition  of  the  other  Group.  Accordingly,   the  Company's
     consolidated  financial  statements  included  herein  should  be  read  in
     conjunction with the financial  statements of each Group and with the notes
     to the consolidated and Group financial  statements  included herein and in
     the Company's SEC filings, including its annual report on Form 10-K and its
     registration statement on Form 8-A.

2.   Accounting Policies
     -------------------

     The Circuit City Group has  accounted  for its interest in the CarMax Group
     in a manner similar to the equity method of accounting.  Generally accepted
     accounting  principles  require that the CarMax Group be consolidated  with
     the Circuit  City Group.  Except for the effects of not  consolidating  the
     CarMax Group with the Circuit City Group,  the financial  statements of the
     Circuit City Group conform to generally accepted accounting principles. The
     interim period financial statements are unaudited;  however, in the opinion
     of  management,  all  adjustments  (consisting  only of  normal,  recurring
     adjustments)  necessary for a fair presentation of the interim consolidated
     financial statements have been included.  The fiscal year-end balance sheet
     data was derived from audited financial statements.


                                 Page 21 of 39

3.   (Loss) Earnings per Share
     -------------------------

     Reconciliations  of the  numerator  and  denominator  of basic and  diluted
     (loss) earnings per share from continuing operations are presented below:

 

                                                                         Three Months Ended                 Nine Months Ended
     (Amounts in thousands                                                  November 30,                      November 30,
     except per share data)                                            2000            1999              2000            1999
     --------------------------------------------------------------------------------------------------------------------------

     Weighted average common shares.............................      204,079         201,610           203,569         201,128
     Dilutive potential common shares:
        Options.................................................            -           2,092             1,167           2,216
        Restricted stock........................................            -             823               915             836
                                                                  ---------------------------       ---------------------------
     Weighted average common shares and
        dilutive potential common shares........................      204,079         204,525           205,651         204,180
                                                                  ===========================       ===========================

     (Loss) earnings from continuing operations
        available to common shareholders........................  $   (64,407)    $    52,335       $    48,057     $   167,425
     Basic (loss) earnings per share from continuing
        operations..............................................  $     (0.32)    $      0.26       $      0.24     $      0.83
     Diluted (loss) earnings per share from continuing
        operations..............................................  $     (0.32)    $      0.26       $      0.23     $      0.82


     For the  three-month  period ended  November 30, 2000,  options to purchase
     9,922,445  shares of Circuit City Group Common Stock at prices ranging from
     $9.09  to  $47.53  per  share  were  outstanding  and not  included  in the
     calculation  of  diluted  loss per share  because  they  would  have had an
     antidilutive effect as a result of a loss from continuing  operations.  For
     the three-month  period ended November 30, 1999,  options to purchase 2,000
     shares  of  Circuit  City  Group  Common  Stock at $43.03  per  share  were
     outstanding  and not included in the  calculation  of diluted  earnings per
     share  because the options'  exercise  prices were greater than the average
     market price of the common shares.

4.   Gain or Loss on Securitizations
     -------------------------------

     For transfers of receivables  that qualify as sales,  the Group  recognizes
     gains or losses as a component of the Group's finance  operations.  For the
     three-month  period ended November 30, 2000, the change in the Circuit City
     Group's  retained  interests  of credit card  securitizations  consisted of
     originated interests of $11.2 million,  less amortization of $11.2 million.
     For the same period last fiscal year, the change in the retained  interests
     consisted of originated  interests of $9.7 million,  less  amortization  of
     $9.8 million. For the nine-month period ended November 30, 2000, the change
     in the  retained  interests  consisted  of  originated  interests  of $34.3
     million,  less  amortization  of $36.5  million.  For the same  period last
     fiscal  year,  the change in retained  interests  consisted  of  originated
     interests of $27.5 million, less amortization of $29.5 million.

5.   Appliance Exit Costs
     --------------------

     On July 25, 2000, the Company  announced  plans to exit the major appliance
     category in all Circuit City stores.  This  decision  reflects  significant
     sales weakness and increased  competition in the major  appliance  category
     and management's sales and earnings  expectations for its new store design.
     To exit the  appliance  business,  the Company will close six  distribution
     centers by  December  31,  2000,  and expects to close two more by July 31,
     2001. The Company also expects to close seven service operations by the end
     of the fiscal  year and one more by June 30,  2001.  The  majority of these
     properties  are leased.  The Company is in the process of  marketing  these
     properties  to be subleased.  Circuit City will  maintain  control over its
     in-home  major  appliance  repair   business,   although  repairs  will  be
     subcontracted  to an unrelated third party.

                                 Page 22 of 39

     In the second quarter of fiscal 2001, the Company  recorded  appliance exit
     costs of $30 million.  The majority of these  expenses are included in cost
     of sales, buying and warehousing on the statements of operations.

     Of the total exit  costs,  $4.4  million  relates to  employee  termination
     benefits.  As of November 30, 2000,  approximately  350  employees had been
     terminated and approximately 650 additional employees will be terminated as
     locations close or consolidate.  These reductions will take place mainly in
     the service, distribution and merchandising functions. Because severance is
     being  paid to  employees  on a  bi-weekly  schedule  subsequent  to  their
     termination,  cash  payments  lag job  eliminations.  The exit  costs  also
     include $17.8 million for lease termination costs and $5.0 million,  net of
     salvage value, for the write-down of fixed assets.


 
                                                                                               Expenses            Liability at
                                                   Original            Adjustments          Paid or Assets          November 30,
     (Amounts in millions)                         Estimate            to Estimate            Written Off              2000
     -------------------------------------------------------------------------------------------------------------------------------
     Lease Termination Costs...................     $  17.8               $    -                $  0.1              $  17.7
     Fixed Asset Write-Downs...................         5.0                    -                   5.0                    -
     Employee Termination Benefits.............         4.4                    -                   0.4                  4.0
     Other.....................................         2.8                    -                   2.8                    -
                                                  ----------------------------------------------------------------------------------
     Appliance Exit Costs......................     $  30.0               $    -                $  8.3              $  21.7
                                                  ==================================================================================



6.   Discontinued Operations
     -----------------------

     On June 16,  1999,  Digital  Video  Express  announced  that it would cease
     marketing the Divx home video system and discontinue  operations,  but that
     existing,  registered  customers  would  be  able to view  discs  during  a
     two-year  phase-out  period.  The operating results of Divx and the loss on
     disposal  of  the  Divx  business  have  been  segregated  from  continuing
     operations and reported as separate line items, after taxes, on the Circuit
     City Group statements of operations. Discontinued operations also have been
     segregated  on the Circuit City Group  statements  of cash flows.  However,
     Divx is not segregated on the Circuit City Group balance sheets.

     The loss on the disposal  includes a provision for  operating  losses to be
     incurred  during the  phase-out  period.  It also includes  provisions  for
     commitments  under licensing  agreements with motion picture  distributors,
     the write-down of assets to net realizable value,  lease termination costs,
     employee severance and benefit costs and other contractual commitments. For
     the quarters ended November 30, 2000, and 1999, and nine-month period ended
     November 30, 2000, the  discontinued  Divx  operations had no impact on the
     earnings of the Circuit City Group.  For the nine months ended November 30,
     1999, the loss from the discontinued Divx operations  totaled $16.2 million
     after an income tax benefit of $9.9  million.  The loss on the  disposal of
     the Divx  business  totaled  $114.0  million after an income tax benefit of
     $69.9 million in that same period.

     The net liabilities of the discontinued  Divx operations,  reflected in the
     accompanying Circuit City Group balance sheets as of November 30, 2000, and
     February 29, 2000, are comprised of the following:

 

     (Amounts in thousands)                                    Nov. 30, 2000         Feb. 29, 2000
     ---------------------------------------------------------------------------------------------
     Current assets..........................................    $        154        $         612
     Property and equipment, net.............................               -                  513
     Other assets............................................             342                    -
     Current liabilities.....................................         (28,861)             (32,650)
     Noncurrent liabilities..................................         (15,291)             (35,291)
                                                             -------------------------------------
     Net liabilities of discontinued operations..............    $    (43,656)       $     (66,816)
                                                             =====================================


7.   Reclassifications

     Certain  amounts  in prior  years  have been  reclassified  to  conform  to
     classifications adopted in fiscal year 2001.

                                 Page 23 of 39


                                    ITEM 2.

            CIRCUIT CITY GROUP MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net Sales and Operating Revenues and General Comments
-----------------------------------------------------

For the quarter  ended  November 30, 2000,  the Circuit City Group's total sales
declined 7 percent to $2.33  billion from $2.50  billion in the same period last
year. For the nine months ended November 30, 2000, total sales rose 2 percent to
$7.28  billion from $7.12  billion in the first nine months of last year.  Sales
declined for the quarter  because of an overall  softening of sales in virtually
all  product  categories,  including  those not  affected by the partial or full
remodeling of virtually all stores,  promotional  pricing over the  Thanksgiving
holiday weekend and continued  declines in average retail prices for traditional
analog products.  Although sales for the Circuit City business were soft for the
quarter,  sales of  better-featured  products,  new technologies and the new and
expanded categories that were added to stores during the quarter grew rapidly.

Circuit  City's  comparable  store sales changes for the third quarter and first
nine months of fiscal years 2001 and 2000 were as follows:

 

      ========================== ============================= =============================
                                         3rd Quarter                   Nine Months
                                 ----------------------------- -----------------------------
                                     FY 01          FY 00          FY 01          FY 00
      -------------------------- -------------- -------------- -------------- --------------
      Circuit City Group             (10%)           5%            (1%)            8%
      ========================== ============== ============== ============== ==============


The comparable  store sales  performance  shown above for the Circuit City Group
includes all merchandise  sales categories in all comparable  stores.  Excluding
stores in central and south Florida,  where full remodels were completed late in
the third quarter, comparable store sales declined 9 percent for the quarter and
remained unchanged for the nine-month period ended November 30, 2000. Comparable
store sales in the major  appliance  category  declined 84 percent for the third
quarter of this year and 36 percent for the nine-month period ended November 30,
2000.  Excluding the appliance  category,  from which the company  completed its
exit in the third quarter, comparable store sales rose 3 percent for the quarter
and 6 percent for the nine months ended November 30, 2000.

During  the first  quarter  of  fiscal  2001,  Circuit  City  removed  the major
appliance category from stores primarily in central and south Florida in advance
of a full remodel of those  stores to focus  solely on the consumer  electronics
and home office  categories.  Circuit City  completed  full remodels of these 26
stores the weekend prior to Thanksgiving  and has now grand-opened 18 new stores
that follow the new  consumer  electronics  and home  office-only  design.  This
design includes a more contemporary look,  expanded  merchandise  selections and
more flexible ways for the consumer to shop.

In late July 2000,  the  Company  announced a plan to  strategically  reposition
itself  exclusively  as a  retailer  of  consumer  electronics  and home  office
products.  The Company  discontinued  the sale of major appliances in all stores
and undertook  partial  remodels to expand the  selection of computer  software,
peripherals and accessories; video game hardware and software; movie titles; and
digital  cameras,  and to add 35mm  cameras  and  accessories.  During the third
quarter,  Circuit City  completed the exit from the  appliance  category and the
partial remodel of 547 stores.

Management  believes  that it has achieved key consumer  objectives in the store
design  introduced in the new and fully remodeled stores and expects to continue
to follow this design for all new Circuit City store  construction in the coming
fiscal year. Circuit City expects to open 15 to 20 new stores and to relocate 10
to 15 stores in the  upcoming  fiscal  year.  However,  the  success  of the new
categories  in the partial  remodels  suggests  that the Company can  strengthen
Circuit City's brand identity and return on investment  with a full remodel that
is less costly and less disruptive than the full remodels  completed this fiscal
year.  Therefore,  in the coming  fiscal  year,  Circuit  City expects to test a
remodel  with an average  cost of  approximately  $1.5  million per store.  This
remodel will achieve similar product adjacencies, product availability, lighting

                                 Page 24 of 39

and signage benefits as in this year's full remodels,  while eliminating  costly
changes that management believes have little short-term impact on sales volumes.
Management  expects  completion time for these remodels to be  approximately  60
days. Circuit City expects to remodel 20 to 25 stores to reflect this new design
in the upcoming fiscal year.

 

The table below details Circuit City retail units:

     =================================================================================================
                                Retail Units At End of Quarter        Estimate
                               -------------------------------
                               Nov. 30, 2000     Nov. 30, 1999     Feb. 28, 2001     Feb. 29, 2000
     -------------------------------------------------------------------------------------------------
     Superstore
     -------------------------------------------------------------------------------------------------
       "D" Superstore               118                118              118                 118
     -------------------------------------------------------------------------------------------------
       "C" Superstore               309                295              314                 295
     -------------------------------------------------------------------------------------------------
       "B" Superstore               107                101              107                 102
     -------------------------------------------------------------------------------------------------
       "A" Superstore                56                 56               56                  56
     -------------------------------------------------------------------------------------------------
     Circuit City Express            39                 45               39                  45
     -------------------------------------------------------------------------------------------------
     TOTAL                          629                615              634                 616
     =================================================================================================


For the Circuit  City  Group,  gross  dollar  sales from all  extended  warranty
programs  were 5.1 percent of sales in the third quarter of fiscal 2001 compared
with 5.5  percent  of sales in the third  quarter  of fiscal  2000.  Third-party
warranty revenue  decreased to 3.9 percent of sales in this year's third quarter
from 4.3  percent in the same  period  last year.  The total  extended  warranty
revenue  that is reported in total sales was 4.0 percent of sales in this year's
third quarter  versus 4.5 percent in the third quarter of last fiscal year.  The
decline  reflects the impact of lower average  retail prices on consumer  demand
for the related  warranties in many  categories,  increased sales of products on
which the Company  does not offer  extended  warranty  programs and the shift in
extended  warranty  sales from Circuit City extended  warranties to  third-party
extended  warranties  over the past five  years.  The gross  profit  margins  on
products sold with extended  warranties are higher than the gross profit margins
on products sold without extended warranties.

Circuit City has updated its product category  breakdowns to reflect the changes
in its product selections that have occurred in recent years and are expected to
continue occurring during the current decade. Prior years and quarters are being
restated for  comparability.  The percentage of merchandise sales represented by
each category is listed below:

 
====================================================================================================================
                             1st Quarter ended       2nd Quarter ended     3rd Quarter ended       Nine Months ended
                                   May 31                 August 31           November 30             November 30
                           -----------------------------------------------------------------------------------------
                              2000        1999       2000        1999       2000        1999       2000       1999
-------------------------- ----------- ---------- ----------- ---------- ----------- ---------- ---------- ---------
Video                          32%         32%        32%         29%         37%        32%        34%        31%
-------------------------- ----------- ---------- ----------- ---------- ----------- ---------- ---------- ---------
Audio                          15          16         15          15          16         15         15         15
-------------------------- ----------- ---------- ----------- ---------- ----------- ---------- ---------- ---------
Information Technology         34          31         34          33          37         34         35         33
-------------------------- ----------- ---------- ----------- ---------- ----------- ---------- ---------- ---------
Entertainment                   5           5          5           5           8          5          6          5
-------------------------- ----------- ---------- ----------- ---------- ----------- ---------- ---------- ---------
Appliances                     14          16         14          18           2         14         10         16
-------------------------- ----------- ---------- ----------- ---------- ----------- ---------- ---------- ---------
Total                         100%        100%       100%        100%        100%       100%       100%       100%
========================== =========== ========== =========== ========== =========== ========== ========== =========

The Circuit City Group's operations,  in common with other retailers in general,
are subject to seasonal  influences.  Historically,  the Circuit  City Group has
realized  more of its net sales and net  earnings in the final  fiscal  quarter,
which includes the December  holiday  selling  season,  than in any other fiscal
quarter. The net earnings of any interim quarter are seasonally disproportionate
to  net  sales  since  administrative  and  certain  operating  expenses  remain

                                 Page 25 of 39

relatively  constant during the year.  Therefore,  interim results should not be
relied upon as necessarily indicative of results for the entire fiscal year.

Cost of Sales, Buying and Warehousing
-------------------------------------

The gross profit margin was 22.0 percent of sales in the third quarter of fiscal
2001  compared  with 24.8  percent in the same  period  last year.  For the nine
months  ended  November 30,  2000,  the gross profit  margin was 23.2 percent of
sales  compared  with 24.8 percent for the same period last year.  Excluding the
appliance category,  Circuit City's gross profit margin was 24.1 percent in this
year's third quarter compared with 25.9 percent in the same period last year and
24.8 percent for the nine-month  period ended  November 30, 2000,  compared with
25.4  percent  for the same period  last year.  Thanksgiving  weekend was highly
promotional and sales of traditional products with lower year-over-year  average
retail prices remained high. As a result, the third quarter gross profit margin,
excluding  appliances,  was significantly  lower than anticipated.  In addition,
appliance  merchandise  markdowns  associated  with the exit from the  appliance
business  reduced the gross margin by $21.0 million in this year's third quarter
and $28.0 million for the nine months ended  November 30, 2000. The gross profit
margin for the nine months ended  November  30, 2000,  was also reduced by $28.3
million of one-time  appliance exit costs incurred in the second fiscal quarter.
The  one-time  costs  included  lease   terminations  and  related  fixed  asset
write-downs, employee severance and other related costs. Excluding the impact of
the appliance  merchandise  markdowns and the one-time appliance exit costs, the
gross  margin was 22.9  percent of sales in this year's  third  quarter and 24.0
percent for the nine months ended November 30, 2000.

Selling, General and Administrative Expenses
--------------------------------------------

The  selling,  general and  administrative  expense  ratio for this year's third
quarter was 26.7 percent of sales compared with 21.1 percent for the same period
last year.  This ratio  includes  $33.6 million in costs  associated  with fully
remodeling  the stores  primarily in central and south Florida and $30.0 million
in  costs  related  to the  partial  remodels  to exit the  appliance  business.
Excluding  these costs,  this year's expense ratio would have been 24.0 percent.
Excluding  remodeling costs and the estimated sales disruption  during the seven
to 10 days of partial remodels,  the third quarter expense ratio would have been
23.6 percent. The third quarter ratio, excluding the remodel costs and the sales
disruption,  reflects  lower-than-anticipated sales through much of the quarter.
The full remodel costs exceeded  management's  expectations  and reflect changes
made to the design during the remodeling  process,  the complexity of completing
this  first  group  of  remodels  and the  desire  to  complete  them  prior  to
Thanksgiving.

For the  nine-month  period ended  November  30, 2000,  the Circuit City expense
ratio was 22.7 percent compared with 20.9 percent for the same period last year.
This ratio includes $41.9 million in remodeling costs for the Florida stores and
$30.0 million in costs related to the partial  remodels.  Excluding these costs,
this year's expense ratio would have been 21.7 percent. Excluding the remodeling
costs and the sales  disruption,  the  expense  ratio was 21.6  percent  for the
nine-month period ended November 30, 2000.

(Loss) Earnings Before Inter-Group Interest in the CarMax Group
---------------------------------------------------------------

Excluding the Inter-Group Interest in the CarMax Group, the loss from continuing
operations  for the Circuit  City Group was $70.1  million in this year's  third
quarter compared with earnings from continuing  operations of $54.7 million last
year.  The loss per share  from  continuing  operations  was 34 cents  this year
compared  with  earnings per share from  continuing  operations of 27 cents last
year.  Excluding the  Inter-group  Interest in the CarMax  Group,  earnings from
continuing  operations for the nine-month  period ended November 30, 2000,  were
$19.9 million,  or 10 cents per share, this year,  compared with $165.3 million,
or 81 cents per share, in the first nine months of last fiscal year.

Appliance  merchandise  markdowns  associated  with the exit from the  appliance
business  reduced this year's third  quarter  earnings per share for the Circuit
City business by 6 cents. The costs associated with fully remodeling the central
and south Florida stores reduced third quarter  earnings per share by another 10
cents,  and the costs associated with the partial remodels reduced third quarter
earnings  per share by  another  9 cents.  The  sales  disruption  caused by the

                                 Page 26 of 39

absence of any product in the former appliance space during the seven to 10 days
of  partial  remodeling  reduced  earnings  per share by an  estimated  3 cents.
Excluding the markdowns  remodeling costs,  sales disruption and the interest in
CarMax, the loss per share for the Circuit City business would have been 6 cents
for the third quarter ended November 30, 2000.

Appliance  merchandise  markdowns  had an 8-cent per share  impact and  one-time
costs  associated  with the exit from the  appliance  business  had a 9-cent per
share  impact on  Circuit  City  business  earnings  for the nine  months  ended
November 30, 2000.  Costs associated with fully remodeling the central and south
Florida stores reduced earnings for the first nine months of this fiscal year by
13 cents,  and the costs associated with partial  remodels,  largely incurred in
the third fiscal  quarter,  reduced  earnings per share for the nine months by 9
cents.  The sales  disruption,  which  also was  largely  incurred  in the third
quarter,  reduced  earnings  per share by an  estimated 3 cents.  Excluding  the
appliance merchandise  markdowns,  exit costs and remodel expenses and excluding
the retained  interest in CarMax for the nine-month  period,  earnings per share
for the Circuit City business  would have been 52 cents in the first nine months
of this year.

Net Earnings (Loss) Related to Inter-Group Interest in the CarMax Group
-----------------------------------------------------------------------

During the third  quarter,  the net  earnings  attributed  to the  Circuit  City
Group's  Inter-Group  Interest in the CarMax Group was $5.6 million,  or 2 cents
per share,  compared with a net loss of $2.4 million,  or 1 cent per share,  for
the same  period  last  year.  For the first  nine  months of fiscal  2001,  net
earnings  attributed  to the Circuit  City Group's  Inter-Group  Interest in the
CarMax  Group were $28.2  million,  or 13 cents per  share,  compared  with $2.2
million, or 1 cent per share, for the same period last year.

(Loss) Earnings from Continuing Operations
------------------------------------------

The loss from continuing operations for the Circuit City Group was $64.4 million
in this year's third quarter compared with earnings of $52.3 million in the same
period last year.  The loss per share from  continuing  operations  was 32 cents
this year  compared  with  earnings per share from  continuing  operations of 26
cents last year. Earnings from continuing  operations for the Circuit City Group
were $48.1  million,  or 23 cents per share,  for the first nine  months of this
fiscal year,  compared with $167.4  million,  or 82 cents per share, in the same
period last fiscal year.

Reconciliation  of earnings per share from  continuing  operations  is presented
below:

 
                                                    Three Months Ended              Nine Months Ended
                                                      November 30,                     November 30,
                                                   2000           1999              2000          1999
                                                -------------------------------------------------------
Circuit City Store Business...................  $  (0.06)        $ 0.27          $  0.52         $ 0.81
Impact of Merchandise Markdowns*..............     (0.06)             -            (0.08)             -
Impact of Appliance Exit......................         -              -            (0.09)             -
Impact of Florida Remodeling Costs**..........     (0.10)             -            (0.13)             -
Impact of Partial Remodeling Costs**..........     (0.09)             -            (0.09)             -
Impact of Sales Disruption....................     (0.03)             -            (0.03)             -
Inter-Group Interest in CarMax................      0.02          (0.01)            0.13           0.01
                                                -------------------------------------------------------

Circuit City Group............................  $  (0.32)        $ 0.26          $  0.23         $ 0.82
                                                =======================================================
* Reflected as a reduction in gross profit margins.
** Reflected as an increase in selling, general and administrative expenses.



Discontinued Operations
-----------------------

On June 16, 1999,  Digital Video Express announced that it would cease marketing
the Divx home  video  system  and  discontinue  operations,  but that  existing,
registered  customers  would be able to view discs  during a two-year  phase-out
period.  The  operating  results  of Divx and the loss on  disposal  of the Divx
business  have been  segregated  from  continuing  operations  and  reported  as
separate  line items,  after  taxes,  on the Circuit  City Group  statements  of
operations for the periods  presented.  Discontinued  operations  also have been

                                 Page 27 of 39

segregated on the Circuit City Group statements of cash flows.  However, Divx is
not segregated on the Circuit City Group balance sheets.

For the third quarter and nine-month period ended November 30, 2000, and for the
quarter ended November 30, 1999, the discontinued  Divx operations had no impact
on the  earnings of the Circuit City Group.  For the nine months ended  November
30, 1999, the loss from the discontinued  Divx operations  totaled $16.2 million
after an income tax  benefit of $9.9  million.  The loss on the  disposal of the
Divx  business  totaled  $114.0  million  after an income  tax  benefit of $69.9
million in that same period.  The loss on the disposal  includes a provision for
operating  losses to be incurred during the phase-out  period.  It also includes
provisions  for  commitments  under  licensing  agreements  with motion  picture
distributors,   the  write-down  of  assets  to  net  realizable  value,   lease
termination  costs,  employee  severance and benefit costs and other contractual
commitments.

Net (Loss) Earnings
-------------------

The net loss for the  Circuit  City  Group  was $64.4  million,  or 32 cents per
share, in this year's third quarter compared with net earnings of $52.3 million,
or 26 cents per share,  in the same period last year.  Net  earnings  were $48.1
million,  or 23 cents per share,  in the first nine months of this year compared
with $37.2 million, or 18 cents per share, in the same period last year.


Recent Accounting Pronouncements
--------------------------------

In June 1998,  the  Financial  Accounting  Standards  Board issued  statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities."  SFAS No. 133, as amended by SFAS No. 137 and No. 138,
is effective for quarters for fiscal years  beginning  after June 15, 2000. SFAS
No. 133 standardizes the accounting for derivative instruments and requires that
an entity recognize those items as either assets or liabilities and measure them
at fair value.  The Company does not expect the adoption of SFAS No. 133 to have
a material  impact on its  financial  position,  results of  operations  or cash
flows.

Liquidity and Capital Resources
-------------------------------

At November 30, 2000, total assets were $4.13 billion. The inventory increase of
$925.7  million  from  the  end  of  fiscal  2000  reflects  seasonal  inventory
increases,  the building of inventory for category expansion associated with the
partial  remodels and the comparable  store sales decline.  Store  construction,
including the remodels,  and the purchase of inventory  contributed  to a $540.4
million  increase in accounts payable from the end of fiscal 2000. In June 2000,
a term loan totaling $130 million was classified as a current  liability because
it becomes due in June 2001. While the Company has the ability to refinance this
loan, it intends to repay the debt using existing  working  capital.  Payment of
corporate debt will not necessarily reduce Circuit City Group allocated debt.

The Circuit City Group's  finance  operation  has a master trust  securitization
facility  for its  private-label  card that allows the  transfer of  receivables
through  private  placement  and the public  market.  The master  trust  vehicle
permits further  expansion of the  securitization  program to meet future needs.
During the quarter, a $300 million,  five-year public securitization  related to
the private-label card matured and was paid off. The Company also entered into a
$275 million, three-year public securitization related to its private-label card
during the  quarter.  As of November 30,  2000,  the master trust  program had a
total  program  capacity of $1.11  billion.  The Circuit  City  Group's  finance
operation  also  has a  master  trust  securitization  facility  related  to its
bankcard  program.  This master trust vehicle permits  further  expansion of the
securitization  program in both the public and private  markets.  As of November
30, 2000,  the bankcard  master trust  program had a total  program  capacity of
$1.64  billion.  The  Company  anticipates  that it will be able to  expand  its
securitization programs to meet future needs.

The Group relies on the Company's  external  debt  allocated to the Circuit City
Group to  provide  working  capital  needed  to fund net  assets  not  otherwise
financed through sale-leasebacks or receivable securitizations.  All significant
financial  activities  of the Group are managed on a  centralized  basis and are
dependent on the financial  condition of the Company as a whole.  Such financial
activities  include the  investment of surplus  cash,  issuance and repayment of
debt,  securitization  of receivables  and  sale-leasebacks  of real estate.  At

                                 Page 28 of 39

November 30, 2000,  the Company also  maintained  $401 million in seasonal lines
that  are  renewed  annually  with  various  banks,  as well  as a $150  million
revolving credit facility.

Management  believes  that  proceeds  from sales of property and  equipment  and
receivables,  future  increases in the Company's  debt  allocated to the Circuit
City Group,  and cash  generated by  operations  will be  sufficient to fund the
Circuit City Group's capital expenditures and operations.


                                     ITEM 3.

                 CIRCUIT CITY GROUP QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK


The Company  centrally  manages the  private-label  and bankcard  revolving loan
portfolios  of the Circuit City  Group's  finance  operation.  Portions of these
portfolios are securitized and, therefore, are not presented on the Circuit City
Group's  balance  sheet.  Interest rate exposure  relating to these  receivables
represents  a market risk  exposure  that the Company has managed  with  matched
funding.

As of November 30, 2000,  the Circuit  City Group's  private-label  and bankcard
portfolios had not changed significantly since February 29, 2000.


                           FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements,  which are subject
to risks and  uncertainties.  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 Company's report on Form 10-K for the year ended February 29, 2000.

                                 Page 29 of 39


                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                    CIRCUIT CITY STORES, INC. - CARMAX GROUP
                                 Balance Sheets
                             (Amounts in thousands)

 

                                                              Nov. 30, 2000         Feb. 29, 2000
                                                               (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                                      $      7,509          $     9,981
Net accounts receivable                                             107,880              129,253
Inventory                                                           322,153              283,592
Prepaid expenses and other current assets                             2,813                2,844
                                                               ------------          -----------

Total current assets                                                440,355              425,670

Property and equipment, net                                         192,766              211,856
Other assets                                                         35,872               37,969
                                                               ------------          -----------

TOTAL ASSETS                                                   $    668,993          $   675,495
                                                               ============          ===========

LIABILITIES AND GROUP EQUITY
Current liabilities:
Current installments of long-term debt                         $     53,557          $    91,609
Accounts payable                                                     79,989               75,959
Short-term debt                                                      60,912                1,552
Accrued expenses and other current liabilities                       21,104               19,856
Deferred income taxes                                                12,240                7,147
                                                               ------------          -----------

Total current liabilities                                           227,802              196,123

Long-term debt, excluding current installments                       42,736              121,257
Deferred revenue and other liabilities                                6,934                7,249
Deferred income taxes                                                 7,519                5,877
                                                               ------------          -----------

TOTAL LIABILITIES                                                   284,991              330,506

GROUP EQUITY                                                        384,002              344,989
                                                               ------------          -----------

TOTAL LIABILITIES AND GROUP EQUITY                             $    668,993          $   675,495
                                                               ============          ===========

See accompanying notes to group financial statements.

                                 Page 30 of 39



 

                    CIRCUIT CITY STORES, INC. - CARMAX GROUP
                      Statements of Operations (Unaudited)
                  (Amounts in thousands except per share data)

                                                                  Three Months Ended                    Nine Months Ended
                                                                     November 30,                         November 30,
                                                               2000               1999               2000              1999
                                                           ------------       -----------        -----------       ------------

Net sales and operating revenues                           $    561,693       $   488,958        $ 1,860,995       $  1,510,748

Cost of sales                                                   490,014           436,230          1,613,305          1,332,244
                                                           ------------       -----------        -----------       ------------

Gross profit                                                     71,679            52,728            247,690            178,504
                                                           ------------       -----------        -----------       ------------

Selling, general and administrative expenses                     56,809            54,979            177,601            166,801

Interest expense                                                  2,664             2,808              9,150              7,138
                                                           ------------       -----------        -----------       ------------

Total expenses                                                   59,473            57,787            186,751            173,939
                                                           ------------       -----------        -----------       ------------

Earnings (loss) before income taxes                              12,206            (5,059)            60,939              4,565

Income tax provision (benefit)                                    4,638            (1,923)            23,156              1,735
                                                           ------------       -----------        -----------       ------------

Net earnings (loss)                                        $      7,568       $    (3,136)       $    37,783       $      2,830
                                                           ============       ===========        ===========       ============

Net earnings (loss) attributed to:

    Circuit City Group common stock                        $      5,648       $    (2,379)       $    28,202       $      2,166
    CarMax Group common stock                                     1,920              (757)             9,581                664
                                                           ------------       -----------        -----------       ------------
                                                           $      7,568       $    (3,136)       $    37,783       $      2,830
                                                           ============       ===========        ===========       ============

Weighted average common shares:

    Basic                                                        25,570            23,836             25,546             23,502
                                                           ============       ===========        ===========       ============
    Diluted                                                      27,020            23,836             26,965             25,658
                                                           ============       ===========        ===========       ============

Net earnings (loss) per share:

    Basic                                                  $       0.08       $     (0.03)       $      0.38       $       0.03
                                                           ============       ===========        ===========       ============
    Diluted                                                $       0.07       $     (0.03)       $      0.36       $       0.03
                                                           ============       ===========        ===========       ============

Dividends paid per common share                            $          -       $         -        $         -       $          -
                                                           ============       ===========        ===========       ============


See accompanying notes to group financial statements.

                                 Page 31 of 39



                    CIRCUIT CITY STORES, INC. - CARMAX GROUP
                      Statements of Cash Flows (Unaudited)
                             (Amounts in thousands)

 

                                                                                              Nine Months Ended
                                                                                                November 30,
                                                                                          2000                 1999
                                                                                      -----------          -----------

Operating Activities:
Net earnings                                                                          $    37,783          $     2,830
Adjustments to reconcile net earnings to net
    cash provided by (used in) operating activities:
    Depreciation and amortization                                                          14,050               11,165
    Loss (gain) on sales of property and equipment                                            305                  (81)
    Provision for deferred income taxes                                                     6,735                1,427
    Changes in operating assets and liabilities, net of effects
       from business acquisitions:
       (Decrease) increase in deferred revenue and other liabilities                         (315)               1,474
       Decrease (increase) in net accounts receivable                                      21,373              (30,720)
       Increase in inventory                                                              (37,761)             (36,477)
       Decrease (increase) in prepaid expenses, other current assets
         and other assets                                                                      30               (1,202)
       Increase in accounts payable, accrued expenses and other
         current liabilities                                                                6,381               12,356
                                                                                      -----------          -----------
Net cash provided by (used in) operating activities                                        48,581              (39,228)
                                                                                      -----------          -----------


Investing Activities:
Cash used in business acquisitions                                                         (1,325)             (34,849)
Purchases of property and equipment                                                        (8,152)             (40,005)
Proceeds from sales of property and equipment                                              15,508                8,371
                                                                                      -----------          -----------
Net cash provided by (used in) investing activities                                         6,031              (66,483)
                                                                                      -----------          -----------


Financing Activities:
Increase in allocated short-term debt, net                                                 59,360               93,789
Decrease in allocated long-term debt, net                                                (116,573)                (584)
Equity issuances, net                                                                         129                1,814
                                                                                      -----------          -----------
Net cash (used in) provided by financing activities                                       (57,084)              95,019
                                                                                      -----------          -----------

Decrease in cash and cash equivalents                                                      (2,472)             (10,692)
Cash and cash equivalents at beginning of year                                              9,981               17,679
                                                                                      -----------          -----------
Cash and cash equivalents at end of period                                            $     7,509          $     6,987
                                                                                      ===========          ===========


See accompanying notes to group financial statements.

                                 Page 32 of 39



                    CIRCUIT CITY STORES, INC. - CARMAX GROUP
                       Notes to Group Financial Statements


1.   Basis of Presentation
     ---------------------

     The common stock of Circuit City Stores, Inc. consists of two series, which
     are intended to reflect the  performance  of the Company's two  businesses.
     The Circuit City Group Common Stock is intended to track the performance of
     the  Circuit  City  store-related  operations,  the  Circuit  City  Group's
     retained  interest  in the CarMax  Group and the  Company's  investment  in
     Digital Video Express, which has been discontinued. The CarMax Group Common
     Stock  is  intended  to  track  the   performance  of  the  CarMax  Group's
     operations.  The  Circuit  City Group held a 74.6  percent  interest in the
     CarMax Group at November 30, 2000, a 74.7 percent  interest at February 29,
     2000, and a 75.8 percent interest at November 30, 1999.

     Notwithstanding  the attribution of the Company's  assets and  liabilities,
     including  contingent  liabilities,  and  stockholders'  equity between the
     CarMax Group and the Circuit City Group for the purposes of preparing  each
     Group's  financial  statements,  holders of CarMax  Group  Common Stock and
     holders of Circuit City Group Common Stock are  shareholders of the Company
     and are subject to all of the risks  associated  with an  investment in the
     Company and all of its businesses, assets and liabilities. Such attribution
     does not affect title to the assets or  responsibility  for the liabilities
     of the Company or any of its  subsidiaries.  The results of  operations  or
     financial  condition of one Group could affect the results of operations or
     financial  condition  of  the  other  Group.  Accordingly,   the  Company's
     consolidated  financial  statements  included  herein  should  be  read  in
     conjunction with the financial  statements of each Group and with the notes
     to the consolidated and Group financial  statements included herein and the
     Company's  SEC filings,  including  its annual  report on Form 10-K and its
     registration statement on Form 8-A.

2.   Accounting Policies
     -------------------

     The financial  statements of the CarMax Group conform to generally accepted
     accounting   principles.   The  interim  period  financial  statements  are
     unaudited;   however,  in  the  opinion  of  management,   all  adjustments
     (consisting  only of normal,  recurring  adjustments)  necessary for a fair
     presentation of the interim group financial  statements have been included.
     The fiscal year-end  balance sheet data was derived from audited  financial
     statements.

                                 Page 33 of 39

3.   Earnings (Loss) per Share
     -------------------------

     Reconciliations  of the numerator and  denominator of basic and diluted net
     earnings (loss) per share are presented below:

 

                                                                  Three Months Ended                 Nine Months Ended
     (Amounts in thousands                                           November 30,                      November 30,
     except per share data)                                      2000            1999              2000            1999
     -------------------------------------------------------------------------------------------------------------------

     Weighted average common shares......................       25,570          23,836            25,546          23,502
     Dilutive potential common shares:
        Options..........................................        1,386               -             1,314           1,981
        Restricted stock.................................           64               -               105             175
                                                           ---------------------------       ---------------------------
     Weighted average common shares and
        dilutive potential common shares.................       27,020          23,836            26,965          25,658
                                                           ===========================       ===========================

     Net earnings (loss) available to common
        shareholders.....................................  $     1,920      $     (757)      $     9,581     $       664
     Basic net earnings (loss) per share.................  $      0.08      $    (0.03)      $      0.38     $      0.03
     Diluted net earnings (loss) per share...............  $      0.07      $    (0.03)      $      0.36     $      0.03


     For the  three-month  period ended  November 30, 2000,  options to purchase
     1,365,025  shares of CarMax Group Common Stock at prices ranging from $6.06
     to $16.31 per share were outstanding and not included in the calculation of
     diluted net earnings per share  because the options'  exercise  prices were
     greater  than the  average  market  price  of the  common  shares.  For the
     three-month  period ended November 30, 1999,  options to purchase 4,824,235
     shares of CarMax Group Common Stock at prices  ranging from $0.22 to $16.31
     per share were  outstanding  and not included in the calculation of diluted
     net loss per share because they would have had an antidilutive  effect as a
     result of a net loss.


4.   Gain or Loss on Securitizations
     -------------------------------

     For transfers of receivables  that qualify as sales,  the Group  recognizes
     gains or losses as a component of the Group's finance  operations.  For the
     three-month  period  ended  November  30,  2000,  the  change  in  retained
     interests of automobile loan securitizations for the CarMax Group consisted
     of originated interests of $6.9 million, less amortization of $4.6 million.
     For the same period last fiscal year, the change in the retained  interests
     consisted of originated  interests of $0.6 million,  less  amortization  of
     $3.3 million. For the nine-month period ended November 30, 2000, the change
     in retained interests  consisted of originated  interests of $19.9 million,
     less  amortization of $11.9 million.  For the same period last fiscal year,
     the  change  consisted  of  originated  interests  of  $9.4  million,  less
     amortization of $9.3 million.

5.   Interest Rate Swaps
     -------------------

     On behalf of the CarMax Group,  during the quarter the Company entered into
     two 40-month amortizing swaps with a total notional amount of approximately
     $171 million related to the automobile loan receivable securitizations. The
     total notional  amount of the CarMax swaps was $773 million at November 30,
     2000, and $327 million at February 29, 2000.  These swaps were entered into
     as part of the sales of  receivables  and are,  therefore,  included in the
     gain or loss on sales of receivables.

6.   Reclassifications
     -----------------

     Certain  amounts  in prior  years  have been  reclassified  to  conform  to
     classifications adopted in fiscal year 2001.

                                 Page 34 of 39


                                     ITEM 2.

                CARMAX GROUP MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net Sales and Operating Revenues and General Comments
-----------------------------------------------------

For the quarter ended  November 30, 2000,  total sales rose 15 percent to $561.7
million  from $489.0  million in the same period last year.  For the nine months
ended November 30, 2000, total sales rose 23 percent to $1.86 billion from $1.51
billion in the first nine months of last year.  Management  believes  the strong
CarMax  sales  reflect  improved  execution  in the stores,  increased  consumer
traffic  generated by an enhanced Web site,  strong used-car sales and effective
inventory management during this year's fall model-year changeover.

CarMax's  comparable  store sales  changes for the third  quarter and first nine
months of fiscal years 2001 and 2000 were as follows:

              =========================== =========================
                      3rd Quarter                Nine Months
              --------------------------- -------------------------
                 FY 01          FY 00        FY 01         FY 00
              ------------- ------------- ------------- -----------
                  11%             3%          15%           (2%)
              ============= ============= ============= ===========



CarMax has restarted its expansion  plans and expects to open two superstores in
late fiscal 2002.  In addition,  CarMax  continues to seek  prototype  satellite
stores for its existing multi-store markets.

 

The table below details CarMax retail units:

=============================================================================================================
                                      Retail Units At End of Quarter        Estimate
                                     --------------------------------
                                     Nov. 30, 2000      Nov. 30, 1999     Feb. 28, 2001      Feb. 29, 2000
-------------------------------------------------------------------------------------------------------------
 "C" and "B" Stores                        14                14                 14                 14
-------------------------------------------------------------------------------------------------------------
 "A" Stores                                17                17                 17                 17
-------------------------------------------------------------------------------------------------------------
 Satellite Prototype Stores                 4                 2                  4                  4
-------------------------------------------------------------------------------------------------------------
 Stand-Alone New-Car Stores                 5                 5                  5                  5
=============================================================================================================
TOTAL                                      40                38                 40                 40
=============================================================================================================


The table below details CarMax's new-car franchises:

=============================================================================================================
                                               Franchises Open At End
                                                    of Quarter                Estimate
                                         -------------------------------
                                          Nov. 30, 2000    Nov. 30, 1999    Feb. 28, 2001      Feb. 29, 2000
-------------------------------------------------------------------------------------------------------------

  Integrated/Co-Located New-Car                17               15                17                15
  Franchises
-------------------------------------------------------------------------------------------------------------
  Stand-Alone New-Car Franchises                5                5                 5                 5
-------------------------------------------------------------------------------------------------------------
TOTAL                                          22               20                22                20
=============================================================================================================



For the CarMax  Group,  gross dollar sales from all extended  warranty  programs
were 4.1 percent of sales in the third  quarter of fiscal 2001 compared with 3.5
percent in the same period last year.  Third-party warranty revenue increased to
1.8 percent of sales in this year's  third  quarter from 1.5 percent in the same
period last year. The total extended  warranty revenue that is reported in total
sales was 1.8 percent of sales in this year's third  quarter  versus 1.5 percent
in  last  year's   third   quarter.   The  increase  is  a  result  of  enhanced
manufacturers' programs and improved warranty penetration.


                                 Page 35 of 39


The  percentage  of vehicle  sales  represented  by each  category for the third
quarter and the nine months is as follows:

 

       ===============================================================================================
                                              Three Months Ended              Nine Months Ended
                                                  November 30                    November 30
                                            --------------------------------------------------------
                                            2000               1999          2000               1999
       -----------------------------------------------------------------------------------------------
       Vehicle Dollars:
       -----------------------------------------------------------------------------------------------
                   Used Vehicles              81%              78%            80%               79%
       -----------------------------------------------------------------------------------------------
                   New Vehicles               19%              22%            20%               21%
       -----------------------------------------------------------------------------------------------
       Vehicle Units:
       -----------------------------------------------------------------------------------------------
                   Used Vehicles              87%              86%            86%               86%
       -----------------------------------------------------------------------------------------------
                   New Vehicles               13%              14%            14%               14%
       ===============================================================================================



The CarMax Group's  operations,  in common with other retailers in general,  are
subject to seasonal  influences.  Historically,  CarMax stores have  experienced
more of their net sales in the first two  quarters of the fiscal  year.  The net
earnings of any interim  quarter are  seasonally  disproportionate  to net sales
since  administrative and certain operating expenses remain relatively  constant
during  the year.  Therefore,  interim  results  should  not be  relied  upon as
necessarily indicative of results for the entire fiscal year.

Cost of Sales
-------------

The CarMax Group's gross profit margin increased to 12.8 percent of sales in the
third  quarter of fiscal  2001 from 10.8  percent for the same period last year.
For the nine months ended November 30, 2000,  the gross profit margin  increased
to 13.3 percent  compared  with 11.8  percent for the same period last year.  By
effectively  managing  its  inventory  through the fall  model-year  changeover,
CarMax  significantly  reduced the gross profit margin  erosion that occurred in
prior years during this period.  The improved gross profit margin is a result of
that inventory management combined with an increase in sales of used cars, which
carry higher profit margins than new cars.

Selling, General and Administrative Expenses
--------------------------------------------

The selling,  general and administrative  expense ratio improved to 10.1 percent
of sales in the third quarter of fiscal 2001 compared with 11.2 percent of sales
for the same period last year.  For the  nine-month  period  ended  November 30,
2000,  the expense ratio was 9.5 percent of sales compared with 11.0 percent for
the same period last year.  Leverage  from the sales  growth and more  efficient
advertising expenditures led to the better expense ratio.


Net Earnings
------------

The CarMax  Group's net earnings  were $7.6 million in this year's third quarter
compared  with a net loss of $3.1  million in the third  quarter of last  fiscal
year.  The net  earnings  attributed  to the CarMax Group Common Stock were $1.9
million  this year  compared  with a net loss of $757,000  in last year's  third
quarter.  Net  earnings  per share of CarMax  Group Common Stock were 7 cents in
this year's third  quarter  compared with a net loss per share of 3 cents in the
same period last year.

Net earnings for the CarMax Group rose to $37.8 million in the first nine months
of this  fiscal year from $2.8  million in the same  period  last year.  The net
earnings  attributed to the CarMax Group Common Stock  increased to $9.6 million
from  $664,000 in the first nine months of last year.  Net earnings per share of
CarMax Group Common Stock rose to 36 cents from 3 cents in the first nine months
of last year.

                                 Page 36 of 39


Recent Accounting Pronouncements
--------------------------------

In June 1998,  the  Financial  Accounting  Standards  Board issued  statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities."  SFAS No. 133, as amended by SFAS No. 137 and No. 138,
is effective for quarters for fiscal years  beginning  after June 15, 2000. SFAS
No. 133 standardizes the accounting for derivative instruments and requires that
an entity recognize those items as either assets or liabilities and measure them
at fair value.  The Company does not expect the adoption of SFAS No. 133 to have
a material  impact on its  financial  position,  results of  operations  or cash
flows.

Liquidity and Capital Resources
-------------------------------

At November 30,  2000,  total assets were $669.0  million.  Inventory  increased
$38.6  million  from the end of  fiscal  2000  because  of the  addition  of new
franchises during the current year and the general industry-wide slowdown in new
car sales.  In June 2000, a term loan totaling $130 million was  classified as a
current liability because it becomes due in June 2001. While the Company has the
ability  to  refinance  this loan,  it intends to repay the debt using  existing
working  capital.  Payment of corporate debt will not necessarily  reduce CarMax
Group allocated debt.

The  Company  has an asset  securitization  program  operated  through a special
purpose subsidiary on behalf of the CarMax Group. This program had a capacity of
$850  million as of November  30,  2000.  The  Company,  on behalf of the CarMax
Group,  also has a public program with a capacity of $378 million as of November
30,  2000.  The  Company  anticipates  that  it  will  be  able  to  expand  its
securitization programs to meet future needs.

The Group relies on the Company's external debt allocated to the CarMax Group to
provide working capital needed to fund net assets not otherwise financed through
sale-leasebacks  or  receivable   securitizations.   All  significant  financial
activities of the Group are managed on a centralized  basis and are dependent on
the financial  condition of the Company as a whole.  Such  financial  activities
include  the  investment  of  surplus  cash,  issuance  and  repayment  of debt,
securitization  of receivables and  sale-leasebacks  of real estate. At November
30, 2000,  the Company also  maintained  $401 million in seasonal lines that are
renewed annually with various banks, as well as a $150 million  revolving credit
facility.

Management  believes  that proceeds from the sales of property and equipment and
receivables,  future  increases in the  Company's  debt  allocated to the CarMax
Group and cash  generated by  operations  will be  sufficient to fund the CarMax
Group's capital expenditures and operations.



                                     ITEM 3.

                    CARMAX GROUP QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK

The Company  centrally  manages the  installment  loan  portfolio  of the CarMax
Group's  finance  operation.  Portions of this  portfolio are  securitized  and,
therefore,  are not  presented  on the  Group's  balance  sheet.  Interest  rate
exposure  relating to these  receivables  represents a market risk exposure that
the Company has managed with matched funding and interest rate swaps.

Total principal  outstanding for fixed-rate  automobile loans at November 30 and
February 29, 2000, was as follows:

(Amounts in millions)              November 30        February 29
-----------------------------------------------------------------
Fixed APR.......................    $ 1,179             $    932


                                 Page 37 of 39

Financing  for  these  receivables  is  achieved  through  asset  securitization
programs which, in turn, issue both fixed-and floating-rate securities. Interest
rate  exposure  is hedged  through  the use of  interest  rate swaps  matched to
projected  payoffs.  Receivables  held by the Company for investment or sale are
financed with working capital.  Financings at November 30 and February 29, 2000,
were as follows:


(Amounts in millions)                   November 30             February 29
---------------------------------------------------------------------------

Fixed-rate securitizations..........    $    378                  $     559
Floating-rate securitizations
   synthetically altered to fixed...         773                        327
Floating-rate securitizations.......           3                          1
Held by the Company:
   For investment*..................          22                         22
   For sale.........................           3                         23
                                        -----------------------------------
Total ..............................    $  1,179                  $     932
                                        ===================================
* Held by a bankruptcy remote special purpose company


Because  programs are in place to manage interest rate exposure  relating to its
installment loan portfolio,  the Company expects to experience relatively little
impact as interest rates fluctuate.



                           FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements,  which are subject
to risks and  uncertainties.  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 Company's report on Form 10-K for the year ended February 29, 2000.



                           PART II. OTHER INFORMATION



Item 6.       Exhibits and Reports on Form 8-K

              (a)     Exhibits

                      None.

              (b)     Reports on Form 8-K

                      None.


                                 Page 38 of 39



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly  caused  this  report  to be signed  on its  behalf by the  undersigned
thereunto duly authorized.


                            CIRCUIT CITY STORES, INC.



                            By:   s/W. Alan McCollough
                                  --------------------------------------
                                  W. Alan McCollough
                                  President  and
                                  Chief Executive Officer



                            By:   s/Michael T. Chalifoux
                                  --------------------------------------
                                  Michael T. Chalifoux
                                  Executive Vice President,
                                  Chief Financial Officer and
                                  Corporate Secretary



                            By:   s/Philip J. Dunn
                                  --------------------------------------
                                  Philip J. Dunn
                                  Senior Vice President, Treasurer,
                                  Corporate Controller and
                                  Chief Accounting Officer




January 12, 2001

                                 Page 39 of 39