Circuit City (CC) posts surprising 4Q earnings numbers

Posted Apr 9th 2008 12:18PM by Eliza Popescu
Filed under: Earnings Reports, Forecasts, Good news, Consumer Experience, Circuit City Stores (CC)

Shares of electronics retailer Circuit City Stores Inc. (NYSE: CC) have been soaring this morning after the company reported an unexpected fourth-quarter profit. It was the first time in the last six quarters when the retailer was able to post a quarterly profit.

For the quarter, Circuit City announced that its profit climbed to $4.85 million, or 3 cents a share, up from a loss of $4.25 million, or 3 cents, reported in the same period a year ago. The company's move to lay off employees to cut costs proved efficient in its fight against weak sales. Analysts were expecting the retailer to show a loss of 7 cents per share in the quarter.

Taking a look at the company's quarterly revenue, we see a decline of 8% to $3.65 billion, compare with $3.95 billion last year. For this period, the second-largest U.S. electronics retailer posted a drop of 10.4% in same-store sales. Quarterly revenue numbers missed analysts' predictions for sales of $3.79 billion, according to Thomson Financial.

Circuit City had a tough 2007 as the company had to face continued worries over a possible recession. The slumping housing market and soaring fuel prices brought a slowdown in consumer spending and the retailer has seen its stock price hitting new lows over the past year.

Looking ahead, the company's earnings outlook is not really all that pleasing. Phil Schoonover, the retailer's Chief Executive Officer, stated that Circuit City is "currently facing the toughest macroeconomic environment in years."

Blaming weak operating trends, the company predicted for the first-quarter a larger loss compared with a year ago. Circuit City expects to report a loss from continuing operations before income taxes in a range between $180 million and $195 million, compared with a loss of $82.5 million a year ago.

For the moment though, the company's pessimistic outlook didn't disappoint investors' who showed their enthusiasm about its surprising earnings by pushing the stock over 9% higher in morning trading.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

Tags: cc, Circuit City Stores, CircuitCityStores, earnings, electronics, forecast, inthenews, loss