updated 4/11/2005 11:58:18 AM ET 2005-04-11T15:58:18

Circuit City Stores Inc., the nation's second-largest electronics retailer, said Monday that fourth-quarter earnings declined from a year ago as profit margins in the company's domestic segment were hurt by competitive promotions and aggressive year-end clearance sales.

Net income fell to $85.4 million, or 45 cents per share, from $89.6 million, or 43 cents per share, a year ago.

Earnings from continuing operations totaled $82.5 million, or 43 cents per share, down from $94.7 million, or 46 cents per share, in the year-ago period.

Latest-quarter results include costs of $30 million related to lease terminations, asset write-offs and severance for 19 stores, five regional offices and one distribution center closed during February 2005, cost reductions of $4.4 million, a charge of $4.2 million for a multi-year lease accounting revision and a gain of $1.8 million related to the sale of a corporate office building.

Sales grew 5.3 percent to $3.47 billion from $3.3 billion last year, with sales at stores open at least one year decreasing 1.8 percent. Total sales for this year's fourth quarter include domestic segment sales of $3.3 billion and international segment sales of $173.5 million.

Gross profit margin improved to 24.4 percent in the latest quarter from 23.8 percent last year, helped by the inclusion of the international segment.

The company said domestic segment profit margin declined due to lower store merchandise margin as a result of competitive promotions on products such as DVD players, large analog televisions and home-theater-in-a-box and aggressive year-end clearance efforts.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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