Circuit City Loss Wider than Expected on Domestic Sales
Circuit City Storesreported a wider-than-expected second-quarter loss Thursday, as sales sagged for desktop computers, projection and tube TVs, and its shares fell 5 percent in pre-market trading.
The retailer, which is cutting jobs and changing store procedures in a bid to turn business around, said it expected a loss from continuing operations for the third quarter and full year, but forecast a profit for the fourth quarter that includes the Christmas holiday.
Circuit City is overhauling its business after losing market share to bigger rival Best Buy, which reported better-than-expected quarterly results this week and raised its full-year forecast.
The loss came to $62.8 million, or 38 cents a share, for the second quarter that ended Aug. 31, compared with a profit of $10 million, or 6 cents a share, a year earlier.
Analysts had expected a loss of 12 cents a share, according to Reuters Estimates.
The Richmond, Virginia company, which earlier this year introduced a plan to replace more seasoned store workers with lower-paid staff, said sales fell 6.2 percent to $2.64 billion, below analysts' estimates of $2.77 billion.
Comparable-store sales, a measure referring to sales at stores open at least a year, fell 7.9 percent.
In the United States, same-store sales fell 8 percent.
Circuit City said U.S. Web and other direct-channel sales rose 20 percent, while computer service and home theater installation revenue rose 22 percent.
But total television same-store sales fell in the double digits, as a rise in flat-panel TVs was outstripped by weaker projection and tube TV demand.
Analysts expect a loss of 3 cents a share for the third quarter and profit of 86 cents a share for the fourth period, according to Reuters Estimates.