Businessland Says It Expects Quarterly Loss as Sales Slow

The computer retailer Businessland Inc., hurt by a sharp and unexpected slowdown in March sales, warned investors Thursday that it will report a loss for the third quarter.

The company, which told analysts in late February that the quarter was right on plan, said sales of Apple and IBM computers dropped off markedly after the two companies introduced new computers in mid-March.

Businessland said it expected revenue for the quarter ended March 31 to slip to $320 million from $375 million in the prior quarter. Revenue in last year’s third quarter was $293.3 million.

David Norman, chairman and chief executive, said Businessland would have a break-even quarter on an operating basis, meaning the company would post a quarterly loss because of about $2 million in interest charges. The company will report results April 26.

Businessland’s stock closed down $1.50 at $8.875 in trading on the New York Stock Exchange.

In addition to slow March sales, the company was hurt by slim gross profit margins overseas, particularly in the United Kingdom, and problems with its ComputerCraft chain of stores. Both Businessland U.K. and ComputerCraft lost money in the quarter, Norman said.

Norman said the company was taking “strong action” to correct both problems, including laying off 15 to 20 people in the United Kingdom and halting temporarily expansion plans for ComputerCraft.

“We expect to see improvement in the next quarter in both of those operations,” he said.

Operating income also will be affected by adjustments to the company’s inventory of spare service parts, Norman said.

In January, Businessland said it would lay off 195 to 273 people, or 5% to 7% of the company’s work force.

The company, which has suffered from aggressive price discounting of personal computers, has had only marginal success in trying to stem the price cutting, Norman said.

“Our strategy to put a cap on discounting and thus increase gross margins is working, but it is resulting initially in having to walk away from some low-margin business,” he said.

Businessland scored a coup in the third quarter by winning back computer maker Compaq Computer Corp., which pulled its popular business computers from Businessland shelves last year because of a dispute over pricing.

But Businessland will not begin shipping Compaq computers until later this month, and some Businessland salespeople “lost focus” on other products by starting to push Compaq machines too soon, Norman said.