Computer retailer CompUSA Inc met diminished third-quarter expectations, posting a loss of $4.9m, compared to net income of $25.4m, or $0.27 per share, in the year-ago quarter. The loss amounted to $0.05 per share, matching the First Call consensus, and was in line with an earlier warning from the Dallas-based company. Revenue was up 16.5% at $1.69bn, but comparable store sales fell 7.2% for the 148 stores open one year or more.
The company said results for the quarter were negatively impacted by costs related to the transition of its internet operations as a stand-alone business unit and the ongoing overhaul of its IT infrastructure, which hit the bottom line by $0.03 and $0.02, respectively. Those costs aside, results for the quarter were break-even. Costs related to CompUSA Net.com transition are expected to be about $5m to $8m in the fourth quarter. For the nine-month period, net income fell 77.4% to $18.8m on revenue up 18.5% at $4.86bn.
The quarter was hit hard by aggressive pricing in the face of lower-than-anticipated customer demand, which dropped gross margins to 12.8% from 14.1% a year ago. Average selling prices continued their steady march down but the company did not provide a specific figure. In light of the current climate, CompUSA plans to slow its expansion, with plans to open only 10 stores in fiscal 2000.
Including the acquisition of Computer City Inc, the store base has increased almost 40% in the past 12 months and the company now says it will focus on improving overall operating results as those stores mature. Looking ahead, fourth-quarter comparable- store sales are expected to be positive and gross margin should level off and remain flat with the third quarter.
