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Non-Tech : CompUSA (CPU) -- Ignore unavailable to you. Want to Upgrade?

To: Michael who wrote (2347)	5/6/1999 12:36:00 AM
From: blankmind	Respond to of 3187

wsj - May 6, 1999 CompUSA Posts Net Loss, Showing Weakness in Fifth Straight Quarter By EVAN RAMSTAD Staff Reporter of THE WALL STREET JOURNAL DALLAS -- CompUSA Inc. reported its fifth consecutive quarter of weaker performance at a time when its electronics-retailing rivals are posting double-digit sales increases and healthy profits. The company had a net loss of $4.9 million, or five cents a share, for the third quarter ended March 27. The result was in line with the consensus forecast by Wall Street analysts surveyed by First Call. In the year-earlier period, CompUSA had net income of $25.4 million, or 27 cents a diluted share. CompUSA announced its performance after the stock market closed. Its shares, which traded around $19 a year ago, closed down 25 cents to $7.125, in New York Stock Exchange composite trading Wednesday. CompUSA began the third quarter with executives expecting a rebound. But sales volume fell off sharply in February, leading executives in early March to warn of a break-even performance in operations. The company attributed two cents of the per-share loss to capital investments on new internal computer systems and three cents on costs at its Internet-sales unit, called CompUSA Net.com. CompUSA Sees Loss in Current Quarter, but Other Retailers Report Strong Sales (March 5) Revenue was $1.69 billion, up 16% from $1.45 billion a year ago. CompUSA operates 59 more stores than it did a year ago, including 39 it acquired in the fall in its purchase of Tandy Corp.'s Computer City unit. Sales at stores open at least a year fell 7.2%. The company's average selling price was down 15% from a year ago, compared with an 18% drop the previous quarter. But gross profit margin fell to 12.8%, compared with 13.5% in the previous quarter and 14.1% a year ago. On PCs sold under $1,000, gross margins are slimmer. Analysts estimate CompUSA gets $30 to $50 in gross margin from a sub-$1,000 PC. To recover, "we're reviewing everything business by business, trying to ramp up some higher margin businesses like technical services and training," said Jim Halpin, chief executive, who added that closing stores is a possibility. In addition, CompUSA will slow its expansion plans to just 10 new stores in fiscal 2000. In the more lucrative high-end computer market, CompUSA continues to feel pressure from direct-sales firms such as Dell Computer Corp. and Gateway Inc. that custom build PCs. CompUSA launched its own custom PC operation 18 months ago, although it hasn't become a significant portion of the company's sales. Gateway has emerged as a retailing force, building its Gateway Country chain to 154 stores, from 42 a year ago. With a smaller footprint and no inventory, Gateway's stores operate less expensively than CompUSA's.