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TVs drive Circuit City first-quarter profit

Circuit City Stores Inc. on Monday reported a $6.4 million profit for the first quarter, compared to a year-ago loss, driven by store improvements and booming sales of flat-panel TVs.
/ Source: The Associated Press

Circuit City Stores Inc. on Monday reported a $6.4 million profit for the first quarter, again exceeding Wall Street’s expectations, as it benefited from ongoing store improvements and booming sales of flat-panel televisions.

The nation’s No. 2 chain of consumer-electronics stores behind Best Buy Co. Inc. earned 4 cents a share in its fiscal first quarter ended May 31. That compares to a loss of $13.1 million, or 7 cents a share, in the year-earlier period.

Circuit City, based in Richmond, Va., said the recent quarter included a $1.8 million after-tax benefit due to new accounting for stock-based compensation. Net income from continuing operations was $5 million, or 3 cents a share, which beat the 1-cent-per-share estimate of analysts surveyed by Thomson Financial.

The company has exceeded analysts’ expectations for four consecutive quarters.

Sales climbed nearly 18 percent to $2.62 billion in the quarter from $2.23 billion in the year-earlier period. Same-store sales — or sales at stores open at least a year, considered a better barometer of retail performance — rose about 15 percent.

Circuit City shares rose 80 cents, or 2.7 percent, to $30.28 in early trading on the New York Stock Exchange.

Philip J. Schoonover, the retailer’s chief executive officer, said he was pleased with the quarterly results, which came as stores converted more browsers to buyers and then boosted the total on their receipts.

Circuit City saw a double-digit gain in same-store sales in the video group, led by a triple-digit increase in comparable-store sales of flat-panel TVs.

In the information-technology category, the company experienced a low double-digit same-store sales gain, driven by bustling sales of personal-computer hardware.

Circuit City’s first-quarter sales included international revenue of $131.5 million, up 16 percent from $113.2 million in the year-earlier period. But the international division, with about 950 stores in Canada, has seen lower margins because of brand-transition costs and a shift in product mix.

“The work to improve results from our international segment is now underway,” Schoonover said.

Also Monday, Circuit City reaffirmed its guidance for the fiscal year. It expects sales growth between 7 percent and 11 percent, and a gain in domestic same-store sales between 5 percent and 7 percent. The retailer does not issue specific per-share earnings guidance.

Last week, rival Best Buy reported that cost-cutting and sales of big-ticket items powered a fiscal first-quarter profit increase of nearly 38 percent.