Circuit City’s Net Income Falls 47%

Circuit City Stores Inc., the No. 2 U.S. electronics retailer, said Wednesday that its fiscal fourth-quarter profit fell 47%, dragged lower by severance costs and falling sales of wireless phones and personal computers.

Net income dropped to $75.3 million, or 36 cents a share, compared with profit from continuing operations of $140.9 million, or 67 cents, a year earlier, Circuit City said. Sales in the three months ended Feb. 28 fell 5% to $3.2 billion.

Consumers bought fewer higher-profit items such as satellite television systems and defaulted on more credit card purchases, triggering a 77% drop in income at the firm’s finance operations. Profit was hurt by costs from cutting sales staff and remodeling stores to compete with larger rival Best Buy Co.

Circuit City declined to forecast earnings because it said consumers concerned about the economy have cut back on spending even more since the Iraqi conflict began March 20. The company estimated expenses to remodel and relocate stores to make them more competitive would amount to 21 cents a share this year.

“It’s difficult to predict what effect the war might have on consumer spending,” Chief Executive Alan McCullough said during a conference call with investors.

The company’s fourth-quarter profit matched the average forecast of analysts surveyed by Thomson Financial. Circuit City had been expected to earn 47 cents a share before the job cuts were announced Feb. 5.

Shares of Richmond, Va.-based Circuit City rose 13 cents to $5.27 on the New York Stock Exchange. The stock has tumbled 31% this year, contrasted with a 13% gain for Best Buy.