Circuit City Warns of 3Q Loss

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Circuit City

(CC) - Get Report

warned Wednesday that it would report a greater-than-expected third-quarter loss which it blamed on lower-than-anticipated gross margins and sales at its retail consumer electronics stores and the cost of store remodelings in Florida.

The The Richmond, Va., company said it expects to post a loss for the Circuit City Group of 31 cents to 33 cents a share, including the costs associated with remodeling and merchandise markdowns in its jettisoned appliance business. Excluding these costs, the company said third-quarter loss is expected to be 3 cents to 5 cents a share.

Thirteen analysts polled by First Call/Thomson Financial expect the company to post a loss of 8 cents a share for the quarter.

Circuit City expects to release third-quarter earnings for the company, the Circuit City Group and its used-car retail chain,

CarMax

(KMX) - Get Report

, on Dec. 18.

Lehman Brothers

analyst Alan Rifkin on Tuesday cut his earnings-per-share estimates for Circuit City, citing tapering sales after the Thanksgiving holiday weekend in late November. Rifkin cut his earnings outlook for the fourth quarter to 73 a share from 75 cents, and for 2000 to $1.20 a share from $1.23. He also trimmed his estimate for 2001 to $1.40 a share from $1.60.

Circuit City said November same-stores sales for its consumer electronics stories fell 10%, including remodeling charges and the costs of exiting the appliance category. Total third-quarter sales for the group, which includes an interest in CarMax, declined 7% to $2.32 billion from $2.50 billion in the year ago period. Sales for Circuit City stores fell 3% to $2.88 billion from $2.98 billion in the third quarter of last year.

The company also reported that same-store sales for its CarMax subsidiary rose 11% on total sales that grew 15% to $561.5 million from $489 million in the same period last year.

Circuit City shares closed on Monday at $12.75 on the New York Stock Exchange.