The expansion is expected to affect earnings growth in fiscal 2007, a company official said, but the results of those efforts should help per share earnings increase by 30% or more in 2008. For fiscal 2007, per share earnings are projected to range between $2.41 and $2.65.
Guitar Center, which operates 198 stores in 42 states, lost $40 million, or $1.36 per share in the quarter ended Dec. 31, 2006 as soft sales cut into profits. Last year, the Westlake Village, CA retailer showed a profit of $33.5 million, or $1.14 per share, during the fourth quarter. Revenue for the quarter increased 11.7% to $628.5 million from $562.8 million a year earlier.
"Our revenue and net income for the fourth quarter and full year were not as strong as we would have wanted because of the soft sales environment we experienced," Marty Albertson, chairman and CEO said in a conference call. Albertson said the company's website, Musicians Friend, which opened earlier in the year, produced lower than expected sales results, as did Guitar Center's catalog.
Impacting the bottom line even more was a $73.3 million non-cash, after-tax write down associated with the firm's music and arts division, which pulled in $45.8 million in the fourth quarter, a 20.2% increase from the prior year's period. The write down, along with stock compensation charges, put quarterly earnings at $1.11 per share, the company said. Full year earnings were $424,000, or one cent per share, compared to 2005 when earnings were $76.7 million, or $2.67 per share. Revenue for the year increased to $2.03 billion, up from $1.78 billion a year earlier.
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