Circuit City's earnings tumble 37% in quarter Retailing

December 17, 1996|By BLOOMBERG BUSINESS NEWS

RICHMOND, Va. -- Circuit City Stores Inc. said yesterday that its fiscal third-quarter earnings fell 37 percent as costs climbed and personal-computer sales weakened, even with sharp price cuts.

The operator of consumer electronics and used-car stores said net income fell to $19.8 million, or 20 cents a share, from $31.5 million, or 32 cents, a year earlier.

Circuit City had warned that it expected net income of 20 cents a share because of weak sales at the start of the holiday shopping season. Sales of consumer electronics have been slow industrywide amid a lack of compelling new products and high consumer debt, which has been keeping shoppers from making big-ticket purchases. That's forced retailers to lower prices and offer more financing agreements, which hurt margins.

Sales in the three months ended Nov. 30 rose 4.5 percent to $1.86 billion from $1.78 billion. Sales at stores open at least a year fell 10 percent, however.

"The environment is very difficult in consumer electronics," said Terence McEvoy, an analyst at Janney Montgomery Scott. "Nobody's buying computers."

During the latest quarter, Circuit City opened 36 superstores and began the nationwide rollout of its CarMax used-car stores. The retailer also replaced or expanded eight superstores and opened six mall-based Circuit City Express locations.

Pub Date: 12/17/96

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