Circuit City Stores Inc. (CC) Explores Possible Sale
Circuit City Stores (CC 18.92) on Wednesday said it will explore strategic alternatives, including a possible sale, for its Canadian unit InterTAN, and announced additional store closures, to accelerate its transformation and boost financial performance. Shares of the Richmond, Va.-based retailer were indicated up more than 3% in pre-market activity on the news.
Circuit City, which also said it will cut 3,400 store associate jobs, expects to record tax expenses of approximately $144 million in the fourth quarter, related to goodwill impairment, store closings, and other restructuring activities.
Meanwhile, Circuit City announced that it signed a 7-year $775 million deal with International Business Machines (IBM) to outsource its information technology infrastructure services. The company expects cost savings of more than 16% over the life of the contract.
Based on the changes being made, which are aimed at improving the company's financial performance, Circuit City said it expects greater sales volatility during the first half of the year. As such, it lowered its fiscal 2007 sales growth outlook to 8% from a prior range of 9% to 10%. It also reduced its full-year same store sales guidance to 6% from 7% to 8%.
Given the lowered sales outlook, as the company continues to try to improve its financial performance amid a difficult consumer environment and intense competitive pressures, we would not be buying shares at this time. Instead, we continue to favor well-positioned competitors like Best Buy (BBY) and GameStop (GME).
--Richard Jahnke, Briefing.com
Circuit City, which also said it will cut 3,400 store associate jobs, expects to record tax expenses of approximately $144 million in the fourth quarter, related to goodwill impairment, store closings, and other restructuring activities.
Meanwhile, Circuit City announced that it signed a 7-year $775 million deal with International Business Machines (IBM) to outsource its information technology infrastructure services. The company expects cost savings of more than 16% over the life of the contract.
Based on the changes being made, which are aimed at improving the company's financial performance, Circuit City said it expects greater sales volatility during the first half of the year. As such, it lowered its fiscal 2007 sales growth outlook to 8% from a prior range of 9% to 10%. It also reduced its full-year same store sales guidance to 6% from 7% to 8%.
Given the lowered sales outlook, as the company continues to try to improve its financial performance amid a difficult consumer environment and intense competitive pressures, we would not be buying shares at this time. Instead, we continue to favor well-positioned competitors like Best Buy (BBY) and GameStop (GME).
--Richard Jahnke, Briefing.com
Labels: BBY, CC, Circuit City Stores Inc., GME, IBM
posted by Stock Administrator @ 8:48 PM
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