Circuit City 1Q profits fall

RICHMOND, Va. Circuit City Stores today reported that net sales declined 4.3% for the first quarter ended May 31, driven by a comparable-store sales decline of 5.6%. In the same period last fiscal year, the company posted total sales growth of 17.4% and comparable-store sales growth of 14.6%.

The company reported a loss from continuing operations of 33 cents per diluted share compared with earnings of 3 cents per diluted share in the prior year.    

"While I am disappointed with the large net loss for the first quarter, we met our revised guidance while up against our toughest comparable-store sales increase comparison of this fiscal year," said Philip Schoonover, chairman, president and ceo of Circuit City Stores. "We made significant and substantial changes to improve Circuit City and position the company to compete while facing economic uncertainty in the near term and new realities in the consumer electronics marketplace over the longer term.

Circuit City, which recently cut 3,400 employees and is in the process of a major restructuring program has decided to withdraw its financial guidance for the fiscal year. 

"In the first quarter, the amount of change that we introduced to the company led to significant volatility, which we expect to continue through the summer as we roll out the new retail operating platform, convert to the new point-of-sale system in additional stores, gain experience with the new organizational structure and develop competence with using our new merchandising and marketing systems. Combined with an uncertain macroeconomic environment, for the time being, it is difficult to project sales and earnings performance for the balance of the fiscal year," said Schoonover.