Circuit City posts $54.6 million loss for Q1
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Videogame sales strong, but DVD falls in low double digits
By Jennifer Netherby -- Video Business, 6/20/2007
JUNE 20 | A day after its larger rival Best Buy reported disappointing quarterly earnings due to sagging TV sales, Circuit City followed with news of the same.
The struggling No. 2 electronics retailer posted a $54.6 million loss for the first quarter ended May 31, down from net income of $6.4 million the previous year. Net sales were off 4.3% to $2.5 billion.
The chain said TV sales dropped sharply on projection and traditional TVs and an increase in flat-panel TV sales wasn’t enough to make up the numbers.
The company said entertainment sales were up in the low single digits due to strong videogame sales. DVD sales were off in the low double digits, the retailer said.
Due to the changing outlook, the retailer pulled its guidance for the year and didn’t provide new guidance.
Over the last few months, Circuit City has announced staff reductions, laying off 3,400 workers to be replaced by lower-paid workers and slimming its headquarters staff.
The retailer partly blamed the volatility in changes it has begun in its merchandising and marketing systems and new operating procedures being instituted this summer.
“We wanted to make the structural changes to our business during the first quarter and free our associates from unnecessary work, so that in the second quarter, we can build toward executing crisply during the important holiday selling season,” chair, president and CEO Philip Schoonover said in a statement announcing the results. “By simplifying the business and focusing on execution, we will better serve customers with an improved shopping experience in the second half of the fiscal year that should translate to improvements in revenue and margin per transaction in our key product categories.”