Updated from 8:17 a.m. EDT
fourth-quarter earnings shot up 65% from a year ago, easily beating estimates, as the retailer rode a swell of demand for big-screen televisions.
The company guided first-quarter earnings a penny below forecasts but said full-year sales should beat estimates.
Circuit City earned $141.1 million, or 80 cents a share, in the quarter ended Feb. 28, up from $85.4 million, or 45 cents a share, a year ago. On a continuing-operations basis, the company earned 84 cents a share in the latest quarter, 7 cents ahead of the Thomson First Call consensus estimate.
Sales totaled $3.91 billion in the most recent quarter, up 12.8% from $3.47 billion a year ago. The Wall Street consensus was for sales of $3.89 billion. Fourth-quarter same-store sales rose 11.6% from last year, including a triple-digit gain in sales of high-end televisions.
The company's domestic sales totaled $3.71 billion in the fourth quarter, up 12.7% from a year ago, as comparable-store sales shot up 12%. Web-originated sales rose 64% from a year ago. Overall, Circuit City's gross profit margin rose by 26 basis points in the latest quarter, while domestic gross margin rose by 56 points.
The higher profit margin reflected reduced markdowns, Circuit City said. A 217-basis-point reduction in overhead costs reflected a lower store-closing expense and "leverage on higher sales levels, which were partially offset by higher advertising expense."
"For the fourth quarter, we continued to see strong sales growth and also delivered a year-over-year increase in gross profit margin as we managed our supply chain more effectively," the company said. "Our associates executed an effective holiday season plan that resulted in record sales for the month of December and sustained the strong pace through January and February, which led to record sales for the quarter."
The company expects to break even in the first quarter. Analysts were forecasting a profit of 1 cent a share.
For the fiscal year ending next February, Circuit City predicted sales growth of 7% to 11% over the latest year's $11.98 billion, or roughly $12.82 billion to $13.30 billion. Analysts were forecasting $12.3 billion. Circuit City sees same-store sales rising 5% to 7% and pretax earnings from continuing operations that are 2% to 2.4% of sales.
Circuit City's shares are up 9% this year, reflecting optimism about the first quarter after the company twice raised guidance. On Wednesday, they added 62 cents, or 2.5%, to $25.23. Analysts expect Circuit City to earn $1 a share this fiscal year, giving the stock a forward price-to-earnings ratio of about 25.
Shares of rival
added 9 cents, or 0.6%, to $56.69.