Tuesday, May 1, 2007

Circuit City Issues Warning

From the WSJ:

Circuit City Stores Inc. warned that April sales were "substantially below plan" and pulled its financial guidance for the first-half of the year. Shares fell 8% in late trading.

The consumer electronics retailer, which is in the midst of restructuring and faces intense competition in the television market, cited weak sales of large flat-panel and projection-televisions. The company previously anticipated a pretax loss of $40 million to $50 million in the first half of the year.

Circuit City shares closed the regular trading session on the New York Stock Exchange down 2.7% at $17.45. In after-hours trading, the stock was recently at $16, down 8.3%.


I looked for similar announcements from Best Buy and couldn't find any. Therefore, this may be company specific information.

However, it may also be a sign of a broader consumer slowdown. Yesterday the BEA announced that consumer purchases dropped .2% in March after adjusting for inflation. This may be a single data point in time which will rebound in the future.

However, it may not. Therefore, it's important to watch retailers' announcements for clues about future consumer behavior.