Richmond, Va. — Circuit City Stores posted net losses for its 2007 fourth quarter and year, blaming the shortfall on falling flat-panel TV prices and poor PC and satellite radio sales.
For the fourth quarter, ended Feb. 28, the retail chain posted a net loss of $12.2 million on sales of $3.9 billion, and $11.8 million on annual sales of $12.4 billion. Net sales did increase for both periods, growing 1.2 percent for the quarter and 7.9 percent for the year. These figures are down considerably from last year when Circuit recorded a fourth-quarter net profit of $141.4 million along with a net profit of $139.7 million profit for the year.
For the quarter, comp-stores sales fell 0.5 percent, but were up for the year by 5.8 percent.
Compounding the product pricing issues, Circuit’s net earnings were hurt by payments related to store closings and other reorganization-related charges. In a post 2007 fiscal move, Circuit City reported another major shake-up last month.
Philip J. Schoonover, Circuit City’s chairman, president and CEO, expressed his discontent with the results, saying he expected the company to perform better during the fourth quarter.
“Fourth-quarter sales growth was somewhat less than we expected. During the quarter, flat-panel television average selling prices were well below the prior year, and our PC hardware business experienced volatility around the Microsoft Windows Vista operating system transition,” he said. “PC hardware posted strong sales growth in both December and February, but January sales were impacted as we kept PC inventories lean in advance of the transition.”
Circuit said its video category generated low-single-digit comp-store decreases for the quarter, with overall sales for the year being described as flat compared with 2006. This situation was created by double-digit declines in projection and CRT TV sales, which offset a similar increase in the flat-panel category.
Other areas experiencing declines were digital imaging, camcorders, DVD hardware, desktop PCs, satellite radio and home audio.
Helping the chain’s balance sheet were sales increases in notebook computer, portable audio, navigation and video game products. The company expects these categories to continue to grow this year.