Circuit City Stores, Inc. (NYSE: CC) said it brought in third quarter earnings of 26 cents a share, in line with First Call's estimate.
Shares in the retailer of electronics goods fell 2 11/16 to 39 7/8 after the company reported that it would have earned 27 cents per share, a penny ahead of estimates, if not for its money-losing CarMax business. The CarMax Group (NYSE: KMX) reported a net loss of $3.1 million in this year's third quarter compared with a net loss of $7.3 million in the third quarter of last year.
Circiut City also announced that W. Alan McCollough, currently president and chief operating officer of Circuit City Stores, has been named to the company's board of directors and will succeed Richard L. Sharp as chief executive officer effective June 2000. Sharp will remain as chairman of the board.
For the quarter ended November 30, Circuit City Stores, Inc. said total sales increased 14 percent to $2.98 billion from $2.62 billion in the same period last year. Earnings from continuing operations rose 66 percent to $51.6 million in this year's third quarter from $31 million in the same period last year.
Earlier this year, the company's Digital Video Express business ceased operations, impacting the prior-year and this year's first quarter and year-to-date earnings, but not this year's second and third quarters.
The company said demand for big screen televisions, including the new digital televisions; DIRECTV; DVD; and wireless communications were top sellers in the third quarter. As the company previously noted, PC sales softened towards the end of the quarter.
Earlier this week, Circuit City and America Online (Nasdaq: AOL) also announced an alliance to provide in-store promotion of AOL products to Circuit City shoppers and feature Circuit City as an anchor tenant in key online shopping destinations. The two companies expect to begin roll out of this program by spring 2000.
The Circuit City Group's retained interest in the CarMax Group reduced the Circuit City Group's earnings by $2.4 million in this year's third quarter compared with $5.6 million in the same period last year. The company expects things to improve in the future with the closure of AutoNation's used-car superstore business as good news. The company also said the favorable response that CarMax has gained, and the substantial progress it has made during this year will allow it to capture a larger market share as this competitor exits its core business.