Circuit City Stores said Wednesday morning it lost $12.2 million in FQ4 2007, down from a $141 million profit in FQ4 2006 -- due to the large discounts it had to offer to attract holiday shoppers. EPS dropped from $0.81/share to a loss of $0.07/share -- analyst estimates were for a profit of $0.63/share. Sales revenue rose 1.2% from $3.89 billion to $3.93 billion, below analyst estimates of $4.05 billion. The results include pre-tax charges of $144.6 million related to the impairment of goodwill, store and facility closures, and other restructuring activities. Sales at stores open at least 12 months rose 6%, below the company's forecast of as much as 8%. Same-store sales dropped 0.5% in the period. In its statement, the company admitted disappointment in its growth: "Fourth quarter sales growth was somewhat less than we expected. During the quarter, flat panel television average selling prices were well below the prior year, and our PC hardware business experienced volatility around the Microsoft Windows Vista operating system transition... We are disappointed in our financial performance, which largely reflects the effects of permanent changes in the television category and transitory changes in the PC category." It said as a result it would accelerate its strategy to increase profit margin. In pre-market trading, shares are down 3.2% to $17.80.
Sources: Press Release, Bloomberg, MarketWatch
Commentary: Earnings Preview: Circuit City, Micron Tech Could Post Negative Suprises • Earnings Preview: Circuit City, Micron Tech Could Post Negative Suprises • Circuit City: Turnaround 'Increasingly Elusive'
Stocks/ETFs to watch: Circuit City Stores Inc. (NYSE:CC). Competitors: Best Buy Co. Inc. (NYSE:BBY), RadioShack Corp. (NYSE:RSH), GameStop Corp. (NYSE:GME), Wal-Mart Stores Inc. (NYSE:WMT). ETFs: Consumer Discretionary SPDR ETF (NYSEARCA:XLY), PowerShares Dynamic Consumer Discretionary (NASDAQ:PEZ), Vanguard Consumer Discretionary VIPERs (NYSEARCA:VCR)
Conference call transcript: Circuit City F3Q07 (Qtr End 11/30/06) Earnings Call Transcript, Circuit City Earnings Conference Call Transcript (later today)
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