Struggling electronics retailer Circuit City said Wednesday it swung to a fiscal fourth-quarter profit, as cost cutting offset lower sales...
RICHMOND, Va. — Struggling electronics retailer Circuit City said Wednesday it swung to a fiscal fourth-quarter profit, as cost cutting offset lower sales for a period that included the bulk of the crucial holiday-shopping season.
Analysts had been expecting a loss for the December-February period on higher revenue for the company, which hadn’t seen a quarterly profit since the second quarter of 2007.
The nation’s second biggest electronics retailer said it earned $4.85 million, or 3 cents per share, in the three months ended Feb. 29 versus a loss of $4.25 million, or 3 cents per share, a year earlier. Analysts polled by Thomson Financial predicted a loss of 7 cents per share and Circuit City forecast a modest loss.
Philip Schoonover, Circuit City’s chief executive, told investors in a conference call that while fiscal year 2008 was disappointing, the fourth quarter showed progress.
Most Read Business Stories
- The penthouse atop Smith Tower is on the rental market for the first time
- Downtowns will be back, but Seattle has choices to make
- US advisers endorse single-shot COVID-19 vaccine from J&J
- Zillow’s price estimates are now cash offers in homebuying push
- Seattle rents tick back up after months of free fall
“We remain confident that we are on the right track,” Schoonover said. “We are implementing the right strategies with the right talent and processes to lead us to a successful turnaround and position us for long-term profitable growth.”
The company is facing pressure from Mark Wattles, an activist shareholder seeking the ouster of Schoonover and Circuit City’s board of directors.
Wattles Capital Management, which owns a 6.5 percent stake in the company, has said turnaround efforts under Schoonover have been “disastrous,” and he should be replaced.
Wattles, founder of the Hollywood Entertainment video-rental chain, wants to oust all of Circuit City’s 12-member board and nominate five directors.
The company said Wednesday it achieved approximately $65 million in reduced costs and expenses in the fourth quarter from continued structural changes.
That more than offset an 8 percent decline in revenue to $3.65 billion from $3.95 billion last year. Analysts expected revenue of $3.79 billion. Same-store sales, or sales in stores open at least one year, fell 10.4 percent.
Circuit City projected that 2009 consolidated net sales will remain relatively unchanged compared with the prior year.
In the fourth quarter, Circuit City’s video sales saw a low-double-digit decrease, with double-digit sales growth in flat-screen televisions unable to offset significant sales decreases in tube and projection televisions. Sales of camcorders and DVD hardware fell by double digits.
Sales of information-technology products fell by high single digits in the fourth quarter, as sales of notebook computers grew and sales of desktop computers continued to decline.
Circuit City’s audio sales fell by double digits in the period. Portable digital audio, home audio and digital satellite radio items saw a significant decrease.
Sales of extended warranties fell about 32 percent in the quarter, but revenue from Firedog, the company’s PC-services and home-installation business, increased 11 percent, Circuit City said.
Schoonover said the company plans to focus on improving its sales of warranties and installation services as it continues its turnaround efforts.
For the full year, Circuit City lost $319.9 million, or $1.95 per share, compared to a loss of $8.3 million, or 6 cents per share, during the prior year. Revenue fell to $11.7 billion from $12.4 billion a year ago. For the year, Circuit City saved $200 million from the structural changes to cut costs.
Its shares fell 8 cents Wednesday to close at $4.45.