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Circuit City Flickers Out

The retailer swings to a loss as sales miss expectations.
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Circuit City

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swung to a fourth-quarter loss, hurt by weaker-than-expected sales, sliding flat-panel TV prices and restructuring moves.

The electronics retailer posted a loss of $12.2 million, or 7 cents a share, for the quarter ended Feb. 28. A year earlier, Circuit City recorded a profit of $141.4 million, or 82 cents a share.

The results included $144.6 million in pretax charges related to goodwill impairment and store closures, which were part of a restructuring plan Circuit City announced earlier this year.

Analysts polled by Thomson Financial expected earnings of 63 cents a share for the quarter, though it's not clear if that estimate is directly comparable.

Sales rose to $3.93 billion from $3.89 billion last year but missed the average analyst estimate of $4.04 billion. Same-store sales, or sales at stores open at least a year, fell 0.5%.

Circuit City said its sales were "somewhat less" than expected. The company noted that flat-panel TVs -- which have been a huge driver of sales growth -- had average selling prices that were well below the prior year. Moreover, PC sales were hurt by volatility caused by the introduction of


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Vista operating system.

"We are disappointed in our financial performance, which largely reflects the effects of permanent changes in the television category and transitory changes in the PC category," the company said. "We are responding to these market conditions by accelerating our strategy to transform Circuit City into a world-class, multi-channel consumer electronics retailer."

The company said it made "considerable progress" in fiscal 2007 and is planning more improvement in fiscal 2008. Last week, Circuit City announced plans to lay off 3,400 employees and replace them with lower-paid workers.

The company's fourth-quarter report comes on the same day that its larger rival,

Best Buy

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, posted an 18% rise in profits for the period,

beating Wall Street targets.

Shares of Circuit City were falling 50 cents, or 2.7%, to $17.78 in premarket trading.