Analysts covering CompUSA Inc. (NYSE: CPU) set their fourth quarter earnings estimates low enough for the company to beat them.
In fiscal fourth quarter results released after market close Monday, the U.S. computer retailer reported a net loss of $14.9 million, or 16 cents per share for the quarter ended June 26. First Call's survey of 13 research firms predicted a loss of 24 cents per share.
Fourth quarter revenue increased 23 percent year-over-year, to $1.46 billion from $1.19 billion. But sales in stores open a year or more hardly increased, up just 1 percent for the quarter.
The financial report came on the heels of 1,800 job cuts announced earlier in the day. CompUSA had previously said it would reorganize itself with moves such as quitting the commercial distribution and configuration business, choosing one primary distributor for business, government and education, shifting CompUSA Net.com to an Internet-only business, and closing underperforming stores.
"Our new direction is designed to increase gross margins, reduce operating costs, improve customer service, and position CompUSA to take advantage of additional strategic growth opportunities," said James F. Halpin, president and CEO of CompUSA. "Even though we are still in the beginning stages of implementing our new strategy, we have already experienced positive results, including a significant improvement in our retail product margins."
Restructuring moves cost CompUSA about $68 million in one-time charges during the fourth quarter. CompUSA expects to save $100 million annually from its reorganization. Fourth quarter gross margins for the company's core business rose to 13.3 percent from 12.9 percent a year earlier, despite continued declines in average selling prices for computers.
Fiscal 2000 will see between $10 million and $15 million in one-time charges, the company said. CompUSA also expects $8 million to $10 million in transition costs for its new strategy in the new fiscal year, with the majority of that coming in the first quarter.
The company plans to pursue strategic partnerships and possibly an IPO within six months for its online unit, CompUSA Net.com. CompUSA recorded one-time expenses of $6 million related to the online division, which is expected to record operating losses in the first quarter, roughly at the same level as the fourth quarter.
Shares of CompUSA fell 1/2 to 6 11/16 in regular trading prior to the quarterly report. Of 13 analysts surveyed by Zack's Investment Research, nine rate CompUSA the equivalent of a "hold", two maintain "moderate buy" ratings, one recommends it as a "strong buy", and one has a "strong sell" advisory on the stock.>