Circuit City Rises Most in 27 Years on Holiday Sales (Update2)
2007-11-23 16:37 (New York)
By Mark Clothier
Nov. 23 (Bloomberg) -- Circuit City Stores Inc., the second- largest U.S. consumer-electronics chain, gained the most in at least 27 years in New York trading on the day that traditionally marks the start of the holiday shopping season.
Circuit City climbed $1.06, or 19 percent, to $6.51 at 1:17 p.m. in New York Stock Exchange composite trading, the most since at least 1980. Volume was 19.9 million shares, three times the six-month daily average, on a trading day that was three hours shorter than normal.
Overall, retailers' stocks rose, with 28 of 30 members of the Standard & Poor's 500 Retailing Index advancing. The day after Thanksgiving is called Black Friday because it once was the day retailers turn a profit for the year. Circuit City is the index's worst performer this year, with a 66 percent drop after reporting losses in the past four quarters.
"It's not trading on fundamentals; it's on positive news reports about what's going on at the mall," said Adam Futterman, director of options sales and trading at WJB Capital Group Inc. in New York. "It seems like Black Friday is off to a good start."
Black Friday will probably be the busiest shopping day this year, Chicago-based ShopperTrak RCT Corp. said.
Circuit City, based in Richmond, Virginia, is losing market share to Best Buy Co. and Wal-Mart Stores Inc., the world's biggest retailer, which has set aside more store space to flat- panel TVs and is forcing competitors to match its price cuts.
"Best Buy is positioned to take share from its competitors, especially given the current disarray at Circuit City," wrote Matthew Fassler, an analyst at Goldman, Sachs & Co., in a Nov. 21 note. He recommends investors hold the stock.
Price declines for flat-panel televisions appear to have moderated, which should help profit, Fassler wrote. Last holiday season, electronics retailers and discount chains cut prices, especially on flat-panel sets, to lure shoppers.
The U.S. markets closed early because of the holiday yesterday.
--With reporting by Jeff Kearns in New York. Editor: Stevens (bqs/mno/sbl)
To contact the reporter on this story:
Mark Clothier in Atlanta at +1-404-507-1333 or
mclothier@bloomberg.net
To contact the editor responsible for this story:
Michael Nol at +1-212-617-2384 or
mnol@bloomberg.net.
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-0- Nov/23/2007 21:37 GMT