Circuit City Improves Profits

Fourth-quarter profits beat Wall Street expectations for a loss, though revenue falls shy.
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Improved quarterly profits that proved better than analyst expectations for a loss helped lift shares of

Circuit City

(CC) - Get Report

Wednesday.

The consumer electronics retailer earned $4.9 million, or 3 cents a share, in the fiscal fourth quarter ended Feb. 29. That's a marked improvement from the loss of $4.3 million, or 3 cents a share, it recorded in the same quarter the year before.

On an adjusted basis, the company posted earnings from continuing operations of $16.6 million, or 10 cents a share, down from $84.8 million, or 49 cents a share last year. In revenue, Circuit City generated net sales of $3.65 billion, down from $3.95 billion in the prior-year period.

The results beat Wall Street estimates for a loss of 7 cents a share, but fell short of expectations for $3.79 billion in revenue, according to Thomson First Call analyst data.

Circuit City has been undergoing a turnaround that includes shuffling around and remodeling some of its retail properties. "With the rollout of the store-level transformation work complete, we have turned our full attention to improving the in-store customer experience through crisp execution and to rebuilding a more effective customer-focused sales culture," Chairman and CEO Philip Schoonover said Wednesday.

"While the financial results to date clearly do not reflect the expected benefits of our initiatives, we firmly believe the company has the right strategy, the right focus, the right management team and sufficient resources ... to complete our turnaround plan and create long-term sustainable shareholder value," Schoonover said.

Consolidated comparable-store sales fell 10.4%. Domestically, net sales decreased 8.8% to $3.45 billion from $3.78 billion last year, as comparable-store sales slumped 11.3%. Direct channel sales, including Web- and call center-originated sales, however, grew 14%, and revenue from the company's firedog PC and home-theater installation services climbed 11% over the fourth quarter a year ago.

International net sales grew 17.4% to $200.6 million from $170.9 million due in part to the favorable currency exchange rates. International comparable-store sales rose 8.6% in local currency for the quarter.

Circuit City shares rose 15 cents, or 3.3%, to $4.68 in recent trading.

This article was written by a staff member of TheStreet.com.