RICHMOND, Va. - Shares of electronics retailer Circuit City Stores Inc. lost about one-quarter of their value yesterday as investors reacted to the company's wider-than-expected quarterly loss.
The $207.3 million loss for the quarter ended Nov. 30 announced yesterday was driven by lower sales of extended warranties and business interruptions the company blamed on ongoing restructuring efforts.
"Clearly we are very disappointed," chief executive officer Philip Schoonover told Wall Street analysts during a conference call. "Our current focus is to rebuild our selling culture."
He said the company, the nation's second-largest electronics retailer, underestimated the financial impact of cost-saving initiatives on sales. In March, Circuit City announced layoffs of 3,400 sales employees so it could hire lower-paid ones.
The results came three days after larger rival Best Buy Co. reported that its third-quarter profit jumped 52 percent.
Circuit City's loss amounted to $1.26 a share, compared with a loss of 12 cents a share, or $20.4 million, a year ago. Excluding tax-related accounting items, the loss in the latest period was 64 cents a share.
Sales slipped 3 percent, to $2.96 billion from $3.06 billion a year earlier, with sales at stores open at least a year, a key industry measure, falling 5.6 percent.
Analyst Chris Horvers of Bear Stearns Cos. asked Schoonover in the conference call if he had considered looking for a buyer for the company. "It seems every quarter comes as a surprise as to the amount of disruption," Horvers said.
Schoonover maintained that Circuit City was 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."
The results missed the average estimate of analysts polled by Thomson Financial of a loss of 31 cents a share on revenue of $3 billion.
Looking ahead, the company said that, assuming current sales and margin trends continue for the rest of the fourth quarter, it will report a modest pretax loss from continuing operations for the quarter.
Circuit City also said it has received a commitment to more than double its $500 million credit line to $1.3 billion.