Circuit City warns on third quarter
POSTED AT 1:47 PM EST Tuesday, November 5
Associated Press
Richmond, Va. — Circuit City Stores Inc., hurt by a slowdown in sales of such high-profit categories as digital satellite systems and wireless communications, said it now expects to have a larger loss for the third quarter than Wall Street analysts had expected.
Its stock tumbled on the news.
The company — the second-largest U.S. consumer electronics chain behind Best Buy Co. Inc. — said that it now expects to post a loss of 5 cents (U.S.) to 8 cents a share in the three months ending Nov. 30. Company officials had projected a small profit in the quarter, excluding remodel and location costs.
Analysts surveyed by Thomson Financial/First Call had expected a loss of 1 cent a share before charges.
"Much of the sales growth is being generated by less profitable categories, including personal computers, particularly notebook PCs, entry-level DVD players and traffic-driving entertainment software products," W. Alan McCollough, chairman, president and chief executive, said in a statement.
Mr. McCollough added that the retailer is experiencing growth in big-screen television sales.
He said the work stoppage at West Coast ports earlier in the quarter has prevented key holiday products from reaching company stores. But the company anticipates product arrivals before the holiday selling season begins, he said.
Mr. McCullough said uncertainty over the economy and consumer buying trends will result in the company adopting "a more cautious outlook towards the fourth quarter as well." Analysts expect the company to post a profit of 69 cents per share.
He said the company continues to anticipate that remodeling and relocation costs will not exceed 18 cents per share for the fiscal year.
Richmond-based Circuit City will release third-quarter earnings in mid-December.
Shares fell 10.7 per cent, or $1.09 a share, to $9.11 in afternoon trading on the New York Stock Exchange.
The company is a national retailer of consumer electronics, personal computers and entertainment software. It operates 609 Circuit City Superstores and 17 mall-based Circuit City Express stores.
[Harry: That about says it all for the Christmas retail
environment. The port strike plus the low inventory level
means that even if the demand is there, the product won't.
I can't see how retailers can have a good holiday season.] |
