Highfields Capital Releases Statement Regarding Proposal to Acquire Al

BOSTON, March 7 /PRNewswire/ -- Highfields Capital Management ("Highfields") the owner of approximately 6.8% of the outstanding shares of Circuit City Stores, Inc. today released a letter expressing its disappointment in the decision of Circuit City's Board of Directors not to pursue Highfields' February 11th proposal to acquire 100% ownership of the Company for $17 per share in cash. In making such proposal, Highfields had stated its intention to work with Circuit City management, and in subsequent discussions and correspondence with the Company reiterated this desire, as well as its readiness to pursue due diligence and consummation of a transaction on an accelerated basis.

Jonathon S. Jacobson, Managing Director of Highfields, stated, "We are deeply disappointed by the Company's response to our offer. We remain prepared to consummate a transaction that would be good for Circuit City, its employees and its shareholders. As one of the Company's largest shareholders, we are committed to working with management to maximize the value of our investment."

About Highfields Capital Management:

Highfields Capital Management is a Boston-based investment management firm, established in 1998, that primarily makes long-term equity investments in securities of both public and private companies. Highfields manages approximately $6.8 billion in investment funds on behalf of charitable foundations, school endowments and other institutional and private investors.

March 7, 2005 Mr. Alan McCollough Chairman and CEO Circuit City Stores, Inc. 9950 Mayland Drive Richmond, VA 23233 Dear Alan:

Thank you for the call earlier today reporting on the Board's deliberations regarding our proposal of February 11th. As we said, we are most disappointed that the Company has chosen not to pursue our offer. We believed, and still believe, that further discussions with us would have resulted in a transaction that would be attractive to current shareholders, benefit the Company and its employees, and be a good investment for our clients. As you know, we have assembled a team that is prepared to begin due diligence immediately with the goal of consummating a transaction over the next several weeks.

Big box retail is undergoing a rapid transformation resulting in both consolidation and a newfound resolve to improve the operating metrics of the industry. Regardless of the trajectory of their revenues, your competitors, both direct and indirect, are relentlessly seeking to make significant operating and financial improvements with a sense of urgency that has manifested itself in substantial gains for their shareholders that have been absent at Circuit City over the past five years. While our conversations with new members of management during the last year, and particularly over the last month, have increased our confidence in both their willingness and their ability to address the Company's problems, we believe that Circuit City needs to bring even more outside resources to bear as well as more capital discipline.

While we are disappointed with the Board's decision today, given our $200+ million stake in the Company we can assure you that we will work tirelessly to uphold our fiduciary duty to our clients to maximize the value of Circuit City. We have worked constructively with the management teams of dozens of companies that we have invested in over the years to add value and are encouraged that Phil and Mike seem receptive to this approach. As you know, our offer may have been unsolicited but it was not hostile, and should the Board have a change of heart, we remain prepared to commence our due diligence immediately.

Sincerely, Jonathon S. Jacobson Richard L. Grubman CONTACT: Daniela Messina, Weber Shandwick (617) 520-7057 dmessina@webershandwick.com