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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (2940)	9/6/2002 10:48:02 AM
From: Proud_Infidel	Respond to of 25522

Price Cuts Lift Circuit City Sales Friday September 6, 10:28 am ET By Ellis Mnyandu NEW YORK. Sept 6 (Reuters) - Circuit City Group, the No. 2 U.S. consumer electronics chain, reported on Friday that sales at stores open at least a year rose 10 percent in the fiscal second quarter from a year ago as it cut prices and boosted marketing to offset a slowdown on big-ticket purchases. The sales growth helped push the company's shares up by more than 13 percent in early trade on the New York Stock Exchange as it outpaced a 2 percent second-quarter same-store sales increase reported by larger rival Best Buy Co. Inc. (NYSE:BBY - News) on Thursday. Even though Best Buy has had to trim its second-quarter earnings outlook three times since June, Richmond, Virginia-based Circuit City (NYSE:CC - News) forecast its consumer electronics store business to post second-quarter result ranging from break-even to a slight profit as it continues to overhaul its stores. The retailer has been aggressively slashing prices in a bid to be more competitive in an environment that has seen several rivals, including Best Buy, hit by restrained selling due to consumer unease about U.S. economic growth prospects and a jittery stock market. "It is our intention to remain appropriately competitive throughout this fiscal year," Circuit City Chairman, President and Chief Executive Alan McCollough said in a statement. Although price cuts help drive increased customer traffic, they can also hurt the bottom line as cost to maintain them increase over time, analyst say. "Though Circuit City same-store sales exceeded our expectations, the company was extremely promotional," Alan Rifkin, an analyst at Lehman Brother said. He said Best Buy continues to gain market share at the expense of Circuit City despite its higher same-store sales, which compares with a 21 percent drop in same-store sales the company reported for its year-ago quarter. NO PRICE WAR ? Colin McGranahan, an analyst at Bernstein dismissed talk that Best Buy and Circuit City may be locked in a price war, but said Circuit City is making progress in turning its business around. Circuit City business had slipped as it struggled to overhaul itself after stopping sales of home appliances in November 2000. "The consumer is not dying, they just took a little pause in July," he said. Circuit City said it continues to generate strong sales growth in big-screen televisions, particularly digital televisions. It said back-to-school traffic was healthy, with items like notebook computers, printers, monitors, personal digital assistants selling strongly. The retailer, which operates more than 620 consumer electronics outlets, said total sales in the quarter, ended Aug. 31, also rose 10 percent, to $2.22 billion from $2.02 billion a year earlier. Circuit City said it also benefited from its push to place more popular products, such as DVD players and big-screen TVs, into prominent, well-lit areas at about half of its stores in a revamp set for completion before the holiday shopping season. "We remain confident that the earnings per share impact of remodeling and relocation costs will not exceed our original guidance of 18 cents per share for fiscal 2003," McCollough said. Circuit City holds a 64 percent stake in used-car dealer CarMax Inc. (NYSE:KMX - News), which separately reported that it expects to meet or slightly exceed its second-quarter earnings expectations. CarMax total second-quarter same-store sales rose 11 percent, while total sales rose 15 percent to $1.08 billion from $938.9 million. In addition, Circuit City said it expects its planned spinoff of 40-store CarMax to be completed on Oct.1. Circuit City was last up 11.65 percent at $15.91 after climbing as high as $16.12 in early trade on the NYSE, where it was the No. 2 top gainer on a percentage basis. Year-to-date Circuit City is off by about 47 percent, outperforming Best Buy's stock, which is off 52 percent. CarMax shares climbed 8.11 percent, or $1.38, to $18.40.