Circuit City 1Q loss widens, weak forecast

The nation's second largest electronics retailer also said it expects a bigger loss in the second quarter than analysts are expecting and said it is suspending its dividend to keep capital available for its turnaround efforts.

Earlier this week, its bigger rival Best Buy Co. Inc. said its first-quarter profit dropped 7 percent, beating Wall Street expectations.

Richmond, Va.-based Circuit City reported a loss of $164.8 million, or $1 per share, in the three months ended May 31 compared with a loss of $54.6 million, or 33 cents per share, a year ago. The company said revenue fell 7 percent to $2.30 billion from $2.49 billion. Same-store sales--stores open at least a year--dropped 11.3 percent.

Thomson Financial said analysts expected a loss of $1.06 per share on revenue of $2.37 billion.

Shares of Circuit City fell 7 cents, or 1.7 percent, to close at $3.98 Thursday. The stock has traded between $3.44 and $16.27 the past year.

"This is a quarter of steady progress," CEO Philip J. Schoonover said in a conference call with investors, adding that the company is seeing improvement in many of its operating performance measures. "We still have a long way to go, but I'm encouraged by what we've been able to accomplish."

Schoonover also said a review of strategic alternatives to boost shareholder value continues, but the board has not yet determined any course of action.

The company had opened its books last month to Blockbuster Inc. to allow the video-rental chain to conduct due diligence in its takeover bid of just over $1 billion with plans for creating a huge chain that would sell electronic gadgets and rent movies and games.

Schoonover said the company on Thursday filed a shelf registration statement with the Securities and Exchange Commission for possible issues of stock or debt securities in order to give Circuit City "greater flexibility to respond to strategic opportunities as they arise."