Post by unlawflcombatnt on Dec 28, 2007 3:42:26 GMT -6
from Yahoo News / AP
Circuit City posts huge 3Q loss
By MICHAEL FELBERBAUM, Associated Press Writer
Dec 21, 2007
"Holiday shopping might not be enough to save the 4th quarter for struggling electronics retailer Circuit City Stores Inc.
Executives with the Richmond-based company warned Friday that they expect a modest loss in the period, despite America's traditional holiday hunger for televisions and other high-tech gadgets.
Coupled with a wider-than-expected 3rd-quarter loss, the gloomy prediction prompted Wall Street to question whether Circuit City should give up trying to fix its numerous problems and hang out the "for sale" sign.
The nation's second-biggest consumer electronics retailer saw shares tumble Friday as investors reacted to a quarterly loss driven by lower extended warranty sales and business interruptions the company blamed on ongoing restructuring efforts.
"Clearly we are very dissatisfied," Chief Executive Philip Schoonover told analysts during a conference call. Schoonover said the company underestimated the financial impact of cost-saving initiatives on sales. "Our current focus is to rebuild our selling culture," he said.
It's stock fell $1.91, or 28.68 percent, to $4.75 in trading Friday, a 52-week low....
For the 3 months ended Nov. 30, Circuit City's losses ballooned to $207.3 million, or $1.26 per share, from $20.4 million, or 12 cents per share, a year ago....
Sales slipped 3% to $2.96 billion from $3.06 billion a year earlier, with sales at stores open at least a year falling 5.6%....
Chris Horvers from Bear Stearns asked Schoonover in the conference call if he had considered throwing in the towel and looking for a buyer. "It seems every quarter comes as surprise as to the amount of disruption," Horvers said.
Schoonover, however, maintained Circuit City is on the right track. "We're implementing the right initiatives to lead to profitability and sustained growth," he said. "We're staying the course on our longer-term strategic initiatives."
Circuit City also said it has received a commitment to more than double its $500 million credit line to $1.3 billion.
The company also said it planned to open 61 to 63 new and relocated U.S. Superstores in fiscal 2008....It also expects to open 50 to 60 new and relocated stores in fiscal 2009....
Sales of extended warranties were $67.4 million, compared to $103.3 million in the same period last year.
While Circuit City laid off 3,400 high-paid workers and replace them with lower-paid new hires in March, it announced this week the approval of millions in cash incentives to retain its top talent following the departure of several key executives over the past year.
Executive vice presidents could claim retention awards of $1 million each and senior vice presidents could get $600,000....
The bonuses didn't sit well with Merrill Lynch analyst Danielle Fox, who questioned whether Circuit City should be focusing on incentives for the people who sell its products in stores.
"It seems like the top executives are getting paid more for poor performance," Fox said. "I don't see really what the incentive is for them to perform, to stay with Circuit City."..."
Circuit City posts huge 3Q loss
By MICHAEL FELBERBAUM, Associated Press Writer
Dec 21, 2007
"Holiday shopping might not be enough to save the 4th quarter for struggling electronics retailer Circuit City Stores Inc.
Executives with the Richmond-based company warned Friday that they expect a modest loss in the period, despite America's traditional holiday hunger for televisions and other high-tech gadgets.
Coupled with a wider-than-expected 3rd-quarter loss, the gloomy prediction prompted Wall Street to question whether Circuit City should give up trying to fix its numerous problems and hang out the "for sale" sign.
The nation's second-biggest consumer electronics retailer saw shares tumble Friday as investors reacted to a quarterly loss driven by lower extended warranty sales and business interruptions the company blamed on ongoing restructuring efforts.
"Clearly we are very dissatisfied," Chief Executive Philip Schoonover told analysts during a conference call. Schoonover said the company underestimated the financial impact of cost-saving initiatives on sales. "Our current focus is to rebuild our selling culture," he said.
It's stock fell $1.91, or 28.68 percent, to $4.75 in trading Friday, a 52-week low....
For the 3 months ended Nov. 30, Circuit City's losses ballooned to $207.3 million, or $1.26 per share, from $20.4 million, or 12 cents per share, a year ago....
Sales slipped 3% to $2.96 billion from $3.06 billion a year earlier, with sales at stores open at least a year falling 5.6%....
Chris Horvers from Bear Stearns asked Schoonover in the conference call if he had considered throwing in the towel and looking for a buyer. "It seems every quarter comes as surprise as to the amount of disruption," Horvers said.
Schoonover, however, maintained Circuit City is on the right track. "We're implementing the right initiatives to lead to profitability and sustained growth," he said. "We're staying the course on our longer-term strategic initiatives."
Circuit City also said it has received a commitment to more than double its $500 million credit line to $1.3 billion.
The company also said it planned to open 61 to 63 new and relocated U.S. Superstores in fiscal 2008....It also expects to open 50 to 60 new and relocated stores in fiscal 2009....
Sales of extended warranties were $67.4 million, compared to $103.3 million in the same period last year.
While Circuit City laid off 3,400 high-paid workers and replace them with lower-paid new hires in March, it announced this week the approval of millions in cash incentives to retain its top talent following the departure of several key executives over the past year.
Executive vice presidents could claim retention awards of $1 million each and senior vice presidents could get $600,000....
The bonuses didn't sit well with Merrill Lynch analyst Danielle Fox, who questioned whether Circuit City should be focusing on incentives for the people who sell its products in stores.
"It seems like the top executives are getting paid more for poor performance," Fox said. "I don't see really what the incentive is for them to perform, to stay with Circuit City."..."