Updated from 8:05 a.m. EST
Wednesday reported sharply higher fourth-quarter earnings, beating analysts' estimates, and said it would acquire a Canadian consumer electronics chain.
The electronics retailer had net income of $89.6 million, or 43 cents a share, in the quarter ended Feb. 29, vs. $70.9 million, or 34 cents a share, in the year-ago period. The consensus estimate was for 36 cents a share, according to Thomson One Analytics.
Revenue rose 2% to $3.25 billion from $3.19 billion a year ago, while same-store sales inched up 1%. Most of the improvement in earnings came from cost-cutting measures. Gross profit during the period actually slipped, but selling, general and administrative costs fell by about $34 million.
"We are not satisfied with our sales and earnings performance for fiscal 2004," the company said in a statement. "Although we are pleased that, particularly in the fourth quarter, we made progress in our expense reduction efforts, we recognize that a key component of a sustained earnings turnaround will be strong sales growth."
The Richmond, Va.-based company also said it was acquiring
, a Canadian-based retailer, in a deal valued at about $284 million. Circuit City will pay $14 a share in cash for InterTan, whose shares closed at $12.00 Tuesday. The deal is expected to close sometime in the second quarter.
"We believe that this transaction will enable us to quickly expand the offering in our Circuit City superstores and further our efforts to provide complete consumer electronics solutions to our customers," the company said.
InterTAN operates through more than 980 company retail stores and dealer outlets in Canada and sells a variety of private-label and internationally branded consumer electronic products, which will become available in Circuit City stores.
Circuit City shares rose $1.01, or 9.4%, to $11.71, while InterTan's added $1.68, or 13.7%, to $13.93, just shy of the offer price.