Richmond, Va. — Circuit City said it now expects a first-quarter loss and withdrew its forecast for the first half based on disappointing flat-panel and projection TV sales.
The retailer reported that “it experienced substantially below-plan sales, primarily related to the large flat panel and projection television categories” and changed the forecast it reported in early April.
Due to this trend, the company now expects “a loss from continuing operations before income taxes of $80 million to $90 million for the first quarter of fiscal 2008. In light of uncertainties in the current operating environment, the company is withdrawing its previously issued guidance for the first half of fiscal year 2008.”
In April Circuit City indicated that it assumes a pretax loss of $40 million to $50 million in the first half, “with a strong recovery in the second half.” Phil Schoonover, chairman, president/CEO, said the chain will “use the first half to stabilize business for the important second half” in terms of layoff expenses and the like.
In the statement issued yesterday, Circuit City said that assuming business trends improve and the transformation efforts are effective, the company forecasts fiscal 2008 earnings from continuing operations before income taxes (EBT) as a percentage of consolidated net sales at the low end of the company’s previously guided range of 1.4 percent to 1.8 percent.
The company will continue to monitor general business trends as well as the effectiveness of its transformation efforts and expects to provide an updated fiscal 2008 forecast when it releases results for the first quarter of fiscal 2008 in June.
In that same statement, the company reported it would continue to take actions to support sales growth and margin improvements as well as reduce its cost and expense structure in order to compete more effectively in today’s marketplace.
“As previously discussed, we are moving with increased urgency to accelerate our transformation initiatives. Although the first half of the fiscal year will be volatile due to the change in the television business, we believe that our transformation efforts will yield positive results for the full fiscal year,” Schoonover said.