Retailers’ Stocks Get a Nasty Jolt
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More signs of a slowing economy may be what investors overall are hoping to see--unless those signs are coming from their companies.
Shares of electronics retailer Circuit City (CC) plunged $12.50 to $39.63 on Tuesday after the company said sales at stores open for at least a year showed no growth last month. The Richmond, Va.-based chain blamed weaker sales of major appliances in May for its woes.
Circuit City, which also controls the separately traded Circuit City-CarMax used-car chain (KMX, up 44 cents to $3.31 on Tuesday), said its retailing arm expects to post first-quarter operating income of 23 cents a share, 21% higher than a year ago but short of the consensus analyst estimate of 27 cents a share, according to First Call Corp.
Gross profit margins will be below expectations because of a change in merchandise mix, the company said.
Circuit City said its retail unit’s same-store sales rose 7% over the whole quarter ended May 31, boosted by office equipment sales.
The company’s announcement hammered rival Best Buy (BBY), which slid $5.25 to $66.75, and other retailers as well. Target (TGT) slid $6.75 to $57.69, Sears (S) fell $2.63 to $35.75 and Wal-Mart (WMT) fell $1.06 to $58.25.
Meanwhile, Radio Shack (RSH) slumped $3.25 to $41 after the company said same-store sales in May rose 7%, which the company said was as expected.
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