Circuit City Stores Inc., the second biggest U.S. consumer electronics chain, surprised Wall Street by posting a profit in the second quarter on strong television sales. Its shares got a boost from the news.
The retailer said Tuesday it earned $1.4 million, or 1 cent a share, in the quarter ended Aug. 31, compared to a loss of $11.9 million, or 6 cents per share, in the year-earlier period.
Analysts surveyed by Thomson Financial had expected the company to lose 3 cents a share in the quarter.
Circuit City shares rose $1.17, or 7.5 percent, to $16.68 in early trading on the New York Stock Exchange.
It's the first time Circuit City has posted a second-quarter profit in five years, and it came despite a costly fight involving its new Canadian stores. Circuit City took a hit of 3 cents per share in the second quarter after the licensing spat with RadioShack Corp. forced it to rebrand the stores.
Circuit City's sales rose almost 8 percent to $2.56 billion in the quarter from $2.38 billion in the year-earlier period. Same-store sales — or revenue at stores open at least a year — increased 5.3 percent.
W. Alan McCollough, Circuit City's chief executive officer, said the retailer recorded strong sales in many categories, including portable digital audio and its online business. But it was in its critical TV category, he said, that the company "continued to drive market share increases in both plasma and LCD televisions."
Circuit City said flat-panel televisions experienced same-store sales growth in the triple digits.
The gains helped offset same-store sales declines in camcorders, DVD players and desktop computers.
Donald Trott, an analyst with Jefferies & Co., called Circuit City's performance "somewhat of a pleasant surprise." But he added that the retailer benefited from lower store-relocation expenses and positive industry trends, including the iPod phenomenon.
Circuit City trails only Best Buy Co. among the consumer electronics chains in the United States.
