Sales and earnings fell in the fourth quarter at troubled electronics retailer
, as the depressed economy plus the cost of changing the way it pays sales clerks took a toll.
Richmond, Va.,-based Circuit City suffered considerable gross margin deterioration in the fourth quarter because of higher sales of less-profitable merchandise like entertainment software. Conversely, the company had weaker sales of wireless communications products, digital satellite and of extended warranties.
For the quarter ended Feb. 28, the company had earnings from continuing operations of $75.3 million, or 36 cents a share, compared with $140.9 million or 67 cents per share. The latest quarter matched analysts' expectations. Discontinued operations comprise the company's former
The company recently stopped paying its sales clerks by commission, a move that ended up reducing earnings in the latest quarter by $10 million, or 3 cents a share. That's made up of severance costs of $14.2 million, or 4 cents a share, and other costs of $1.6 million, or 1 cent a share, offset partially by payroll savings of $5.8 million, or 2 cents per share.
Total sales for the fourth quarter ended Feb. 28, 2003, fell 5% to $3.19 billion from $3.36 billion. The gross profit margin was 23.9% in the fourth quarter, compared with 24.3% a year ago.