Circuit City has Q4 operating loss on lower sales
Strong flat-panel demand offset by video-equipment weakness
By Danny King -- Video Business, 4/9/2008
APRIL 9 | Circuit City reported a fiscal fourth-quarter operating loss today, as weaker video-equipment sales offset revenue gains for flat-panel TVs and videogaming products. The company, which had a net profit on a tax benefit, said fiscal 2009 same-store sales will fall about 5%.
Revenue dropped 7.7% to $3.65 billion as U.S. same-store sales declined 11.3%, the No. 2 U.S. electronics retailer said in a statement this morning. Same-store sales of rear-projection TVs, camcorders, home-audio equipment and satellite radio products each fell by more than 10%.
“We are currently facing the toughest macroeconomic environment in years,” Circuit City CEO Philip Schoonover said in a statement today. “For most of the operating metrics, the trends are still below prior year, but the gap is narrowing.”
Net income for the quarter ended Feb. 29 was $4.85 million, or 3¢ a share, compared with a loss of $4.25 million, or 2¢, a year earlier, as the company recorded a $7.23 million tax benefit. Circuit City was expected to lose 7¢ a share on $3.79 billion in revenue, the average estimates in a Thomson Financial survey.
The company, which has lost money for five of the last six quarters, has received pressure this year from shareholder Mark Wattles to replace its board. Wattles, who founded movie-rental chain Hollywood Entertainment and whose Wattles Capital Management owns about 6.5% of Circuit City, last week called the company’s turnaround effort “disastrous.” Earlier this week, Circuit City responded in a letter to Wattles, saying he “may not have a full understanding of the company’s current strategy,” adding that his conditions for introducing his proposed board members were “unusual and unreasonable.”
Last week, larger rival Best Buy, which restructured its management team in February, said profit for the quarter ended March 1 fell 3.4% to $737 million as same-store sales fell 0.2%.
