Updated from 10:48 a.m. EDT
Embarking on a costly
exit from the appliance business,
Circuit City Stores
told investors Thursday to brace for lower-than-anticipated earnings in the second quarter.
The retailer said it expects second-quarter earnings of 21 cents a share, 2 cents lower than the company's July forecast and 6 cents lower than analysts' estimates of 27 cents a share, according to
First Call/Thomson Financial
Richmond, Va.-based Circuit City Stores, however, said it has not revised its third- and fourth-quarter profit forecasts.
Circuit City finished Thursday regular trading down 81 cents, or 3%, at $26.94.
In late July, the company announced that it would stop selling appliances, which proved less profitable, and concentrate instead on electronics and home-office goods. During the first quarter, Circuit City removed appliances from 30 stores in central and south Florida.
The expected second-quarter results take into account a one-time loss of 9 cents a share, which includes the costs of lease terminations and employee severance, among other expenses. In addition, the company said it started its clearance sales for appliances earlier than expected and increased price markdowns because of stiffer competition.
In the second quarter ending Aug. 31, Circuit City sales rose 7% to $3.18 billion from $2.96 billion in the second quarter of last year. Sales of video products, including DVDs and big-screen televisions, were particularly strong, the company said.
Circuit City is not the only retailer reporting disappointing profit expectations Thursday.
May Department Stores
, a St. Louis-based retailer, said that its third-quarter earnings likely would fall in the range of 23 cents to 26 cents a share, at least 32% lower than analysts' estimate of 38 cents a share. Wall Streets' forecast is in line with earnings of 38 cents a share in the comparable period of last year.
May, betting on a brighter fourth quarter, said August was tough. The company -- which operates 426 department stores including
Lord & Taylor
stores -- cited poor sales of back-to-school goods and spring and summer apparel.
May Department Stores ended down $1.31, or 6%, at $22.38.