NEW YORK – Circuit City Stores Inc. (CC), the No. 2 U.S. electronics retail chain, Monday reported a 4.3 percent drop in quarterly sales at stores open at least a year, signaling a widening gap with top rival Best Buy Co. Inc. (BBY) and sending its shares down 10 percent.
Circuit City, which has posted inconsistent sales and earnings growth for the last four years, said store traffic was weak because it cut back on promoting cut-price CDs and DVDs.
The Richmond, Va.-based retailer also said changes in the way it sells mobile phones and digital satellite services alienated customers, hurting business.
Wall Street had expected same-store sales to be little changed to up as much as 4 percent. Analysts had thought Circuit City faced easy comparisons with the year-earlier period, when same-store sales fell 1 percent.
Totals sales in the third quarter, which ended Nov. 30, rose 3.8 percent to $2.5 billion, Circuit City said.
By contrast, Best Buy last week reported a 10 percent jump in third-quarter sales, to $6.65 billion. Best Buy's sales at stores open at least 14 months rose 3.2 percent, near the low end of its internal estimate. Analysts said the same-store results reflected reduced spending by low-income earners due to higher gas prices and a skittish job market.
Circuit City shares were down $1.71 to $14.50 in early trade on the New York Stock Exchange (search).