Circuit City profit dives 88% to 3 cents a share

Computer sales fall, costs rise in 2nd quarter

September 20, 2001|By BLOOMBERG NEWS

RICHMOND, Va. - Circuit City Group, the second-biggest U.S. electronics chain, said yesterday that its fiscal second-quarter earnings plunged 88 percent as sales of computers fell and costs to renovate and advertise rose. Net income fell to $6.8 million, or 3 cents a share, from $55.3 million, or 27 cents, a year earlier. Sales in the quarter that ended Aug. 31 fell 19 percent from $2.51 billion to $2.04 billion.

Analysts had expected the company to earn 2 cents a share. It is forecast to earn 4 cents this quarter and 70 cents next quarter.

Profit fell for the fifth quarter in a row as the company lost sales to rival Best Buy Co. and reorganized stores to add more digital goods such as DVDs, analysts said. Sales recovered last weekend after falling immediately after the Sept. 11 terrorist attacks in the United States, the company said.

Sales at stores open at least a year fell 21 percent, partially reflecting the company's exit from appliance sales and a loss of business to discount stores offering inexpensive electronics.

The company said selling, general and administrative expenses rose from $572.3 million to $579.5 million because of remodeling costs and higher advertising expenses.

In the latest quarter, the Circuit City electronics chain had a loss of $12.5 million, or 6 cents, while the auto retailer CarMax Group, in which it has a 65 percent stake, contributed about 9 cents in profit.

A year earlier, results included $30 million, or 9 cents a share, in costs for the termination of leases, employee severance and asset write-downs.

Shares of Circuit City rose 49 cents to $10.40 yesterday.

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