Circuit City Fiscal Loss Widens20 Jun, 2007 By: Erik Gruenwedel
Circuit City Stores posted exponentially higher first quarter fiscal 2008 (ended May 31) losses than last year, partially due to continued lower margin television sales coupled with declines in sales of DVDs and CDs.
The Richmond, Va.-based electronics retailer reported a loss of $54.6 million, compared to income of $6.4 million during the same period last year.
Revenues for the quarter dropped 4.4% to $2.5 billion, compared to $2.6 billion last year.
The company said a small decline in same-store DVD sales and a double-digit decline in same-store CD sales were offset by strong double-digit same-store sales increases in video games and PC software.
Big-screen LCD comp sales increased 9%, but were offset by comp-store sales decreases in plasma and small-screen LCDs.
David Mathews, EVP, merchandising, services and marketing, told investors in an analyst call Circuit City missed sales opportunities in small and medium-priced LCD market, a situation he said was being addressed through ongoing restructuring of both operating platforms and supply systems.
Mathews said the restructuring also includes expanding the Fire Dog in-home IT service and reducing selling, general and administrative (SG&A) expenses $200 million this year.
“We must move beyond TV and focus on audio, DVD, accessories, games, services and digital lifestyle products that bring our individual products together,” said Mathews.
The retailer will open 60 to 65 stores through the end of the year, with more than half of the openings to be in a 20,000 square foot Superstore format.
Circuit City chairman, president and CEO Phillip Schoonover said the fiscal year outlook was a “tale of two halves,” with the first two quarters to produce “volatile” results compared to the third and fourth quarters.
As a result, Schoonover said Circuit City would withdraw financial guidance for the time being.
“We saw results come below our projections but in line with our projections,” said Schoonover. “With the changes in the market place, it was obvious the business-as-usual approach would lead us to predictable and unacceptable outcomes.”