Consumer electronics retailer Circuit City Stores Inc. said Tuesday that it had swung to a loss in the fiscal third quarter as deep discounts on flat-panel televisions and computer hardware and software cut into profit margins. The company also lowered its full-year sales outlook, and its shares fell 16.5%.
The nation's second-biggest consumer electronics chain, after Best Buy Co., reported a loss of $16 million, or 9 cents a share, in the three months ended Nov. 30. Analysts polled by Thomson Financial were expecting a profit of 5 cents a share.
A year earlier, Richmond, Va.-based Circuit City earned $10.1 million, or 6 cents.
Revenue rose about 7% to $3.1 billion last year, falling slightly short of Wall Street's forecast for $3.12 billion. The company had exceeded analysts' expectations for the five previous quarters.
Sales at stores open at least a year, considered a key indicator of retail strength, rose 5.1%.
Circuit City cut its fiscal 2007 sales forecast, citing expectations of continuing pressure on gross margins caused by heightened competition; it expects growth of 8% to 9% instead of the 9% to 11% previously forecast. Same-store sales are expected to grow by 6% to 7%, down from the 7% to 9% previously forecast.
The company had boosted its fiscal outlook after it saw promising second-quarter earnings fueled by flat-panel televisions and digital-imaging products and accessories.
Circuit City shares fell $3.75 to $19.01.
"While we expected significant selling price declines, the magnitude and velocity has been far more than we anticipated," Philip J. Schoonover, the company's chief executive, said in a conference call with analysts.