CNS-piece from Bloomberg
Consolidated Stores Warns of Loss, and Shares Plunge (Update3) (Adds detail in 2nd paragraph. Updates stock activity.)
Columbus, Ohio, July 8 (Bloomberg) -- Consolidated Stores Corp. said it will have an unexpected loss in the fiscal second quarter because of slowing video-game sales at its KB Toys chain and higher import costs, sending its shares down about 33 percent.
The shares fell 7 1/2 to 15 7/8 in midafternoon trading of 13.1 million, making them the seventh most active in U.S. markets. Consolidated was the third biggest percentage among U.S. stocks.
Consolidated, which also operates Odd Lots, Pic 'N' Save and Mac Frugal's Bargain closeout merchandise stores, said video sales in its toy division slowed, and it had higher shipping costs from overseas suppliers. ''About 20 percent of their product is imported, and import freight rates are up about 30 percent,'' said Eric Bosshard, a Midwest Research analyst with a ''buy'' rating on the stock. He expects video sales to recover in the second half of the year.
Consolidated said it expects a loss of 2 cents to 4 cents a share in the quarter ending in August. It was expected to have a profit of 6 cents, the average estimate of analysts polled by First Call Corp.
In addition, a loss of 1 cent a share at its new online toy unit, KBToys.com, contributed to the loss, the company said.
In May, the Columbus, Ohio-based company said it would combine its online toy business with closely held BrainPlay.com, and invest $80 million in the online venture to sell toys, video games, software and videos over the Internet. The KB Toys chain is the No. 2 toy retailer in the U.S., behind Toys ''R'' Us Inc. Consolidated is creating what would be one of the leading Internet sites for selling toys, Bosshard said.
The warning about the loss came as Consolidated said its June same-store sales, or sales at stores open at least two years, rose 3.5 percent. Total sales rose 11 percent to $284.8 million in the four-week period ended June 26.
Consolidated, which operates more than 2,500 stores, is the largest U.S. retailer of closeout merchandise, which it buys from manufacturers, suppliers and other retailers and sells at steep discounts.
Officials of Consolidated weren't immediately available to comment
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