Sales for CompUSA Inc. (NYSE: CPU) didn't fall as much as expected in the first quarter.
After market close Wednesday, the retailer of PCs and related products reported fiscal first quarter sales of $1.36 billion, down 2 percent from $1.39 billion in the same period a year earlier. The company had earlier told analysts to expect percentage declines in double digits.
Sales at CompUSA's 195 stores open at least a year stayed essentially flat. Thirty-three stores converted from the acquired Computer City business are not included in the comparable store sales comparison, although they are part of the total sales figure.
Complete first quarter results are scheduled for release Nov. 4. The company expects to report improvement from the fourth quarter, when it lost $14.9 million.
CompUSA expected a large sales decline this time because the year-earlier quarter was fueled by the debuts of Windows 98 and iMac computers. The company is also going through a reorganization.
"Although we are in the early stages of implementing our new strategy, we have already begun to see the positive results of our new plan," said James F. Halpin, president and CEO of CompUSA.
Retail product margins are rising, Halpin said. The company expects to report first quarter gross margin of 14.5 percent, which would be the highest in six quarters.
As expected, direct sales, tech services and training fell as CompUSA pared customers that didn't generate enough profit. Direct sales dropped to $410 million down 19 percent from a year earlier. Services fell to $3 million, down 8 percent. Training slid 14 percent to $23 million.
Desktop unit sales increased 39 percent for retail and fell 16 percent for direct sales. Average selling prices also stabilized, actually gaining 3 percent sequentially, after declining over several quarters.
Notebook computers rose 45 percent in retail and dropped 25 percent in direct sales. The average price of a notebook computer gained 9 percent from the fourth quarter.
Shares of CompUSA fell 1/8 to 6 in Wednesday's regular trading prior to the sales report. Of 13 Wall Street firms surveyed by Zack's Investment Research, nine rate CompUSA the equivalent of a "hold", two recommend it as a "moderate buy", one has a "strong buy" rating on the stock, and one maintains a "sell" advistory.>