Tuesday, December 19, 2006
No. 2 electronics retailer Circuit City posted a surprise third-quarter loss versus expectations for a profit, saying that its results in the important holiday quarter were hurt by the price war that Wal-Mart ignited, especially in the flat-panel television category.
Circuit City shares tumbled more than 15 percent on the New York Stock Exchange. The news also dented shares of rival Best Buy.
The company reported a loss of 9 cents a share compared to a profit of 6 cents in the same period a year ago. Analysts has forecast Circuit City to report a profit of 5 cents for the period, according to First Call.
Total sales in the period rose to $3.1 billion, up from $2.9 billion a year ago, and in line with analysts' estimates.
Sales at Circuit City stores open at least a year - key retail performance measure known as same-store sales - rose 5.1 percent in the quarter compared to a much stronger 13.1 percent for the same period a year ago.
"The third quarter was volatile for the company," Circuit City CEO Philip Schoonover said in a statement. "During September, our results tracked ahead of our plan, but, as the quarter progressed, our results fell below our expectations."
"While a number of categories underperformed our gross margin expectations, the most significant variance from [the] plan was in the flat-panel television category. The pace of the decline in flat-panel television prices accelerated during the quarter as manufacturers and retailers competed aggressively for market share, and prices fell to unanticipated levels," he said.
By: DocMemory
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