Two Ways To Play: Short Circuit
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For the first quarter, the company said net income fell $1.00 per share, above expectations of -$1.07 per share. Net sales fell 7.4% to $2.3 billion largely inline with forecasts of $2.37 billion. The company also added that sales for stores open more than a year fell 11% with a 12% decline in the U.S. offsetting 10.5% growth internationally. In addition the company suspended its dividend to preserve cash which fell 75% from the prior year's level.
Going forward, Circuit City expects sales to remain flat with same-store figures continuing to decline in the mid-single digits.
From the Bull Pen: Bulls can likely look elsewhere for long exposure. Wal-Mart (WMT) may be an option as it pulls back to the $55 level.
From the Bear Cave: Circuit City's story shows the difficulties retailers are facing. The easy trade may be over but Best Buy (BBY) might still be an option for a downside play.
Have a great night!
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