Margins, Competition Hit Circuit City

Circuit City's first-quarter earnings show the company is facing similiar problems as Best Buy, but it's struggling more.

On Wednesday, Circuit City (nyse: CC - news - people ) reported a first-quarter loss of $54.6 million, or 33 cents per share, a marked deterioration from a profit of $6.4 million, or 4 cents per share, a year ago. The company was hurt by declining margins and tough competition.

Margins slipped at both Circuit City and rival Best Buy in the first quarter. Circuit City''s gross profit margin dropped to 22.5% in the quarter from 24.5% a year ago. On Tuesday, Best Buy reported a first-quarter gross profit margin of 23.9%, down from 25.4% a year ago. (See "Best Buy Shares Fall")