Circuit City Tops Q4 Expectations

Consumer electronics retailer Circuit City (CC 4.53) reported fiscal fourth quarter (Feb.) earnings of $0.10 per share, excluding non-recurring items, $0.17 better than the First Call consensus that called for a loss of $0.07.  Revenues fell 7.7% year-over-year to $3.65 billion versus the $3.79 billion consensus estimate.

In its press release the company said it expects to record a first quarter loss from continuing operations before income taxes of $180 million to $195 million, compared with a loss of $82.5 million in the prior year first quarter. The significant increase in the loss results from Circuit City's expectation of a continuation of the operating trends seen in the second half of fiscal 2008, including a year-over-year decline in gross margin and deleveraged expenses from incremental and relocated stores opened in the prior 12 months that offset savings from expense reduction initiatives.

Due to operating improvements, traction against current sales- and gross margin-driving initiatives, and more favorable year-over-year comparisons, the company expects a gradual recovery in the second half of fiscal 2009, achieving an improved pre-tax profit from continuing operations in the fourth quarter as compared to fiscal 2008 results.

The company believes that it has adequate cash and borrowing capacity to complete the next phase of the turnaround plan. Circuit City sees FY09 revenues relatively unchanged from FY08 revenues of $11.74 billion (consensus is $12.34 billion).

Shares of CC are indicated 7.0% higher in pre-market action.