KB Home, the nation’s fifth-largest home builder by sales, reported a third-quarter loss Thursday on costs to abandon land purchases and gave a pessimistic outlook for the housing market.
The Los Angeles-based company posted a net loss of $35.6 million, or 46 cents a share, compared with net income of $153.2 million, or $1.90 a share, a year earlier. Analysts were expecting a loss of 72 cents a share for the most recent period, according to Thomson Financial. Revenue fell 32 percent, to $1.54 billion.
The most recent results were helped by a $438.1 million gain from the sale of its stake in French developer Kaufman & Broad SA. Excluding that, the company would have reported a loss of $478.6 million, or $6.19 a share.
Chief Executive Jeffrey Mezger said he expects “housing industry conditions to continue to worsen through the end of the year and into 2008.” KB Home reported its second consecutive quarterly loss after $690 million in pretax expenses to write down land and inventory.
“The write-down was much bigger than anyone had been expecting,'” said Dan Poole at National City Private Client Group in Cleveland. “If there’s good news out there, it’s few and far between.”
Net orders fell 6.2 percent, to 3,907, KB Home said. The average selling price slid 7 percent, to $267,700. The backlog was 11,880 houses worth $3.07 billion, down 31 percent and 38 percent, respectively, from a year earlier. The backlog is the number of homes under contract not yet sold.
The third-quarter cancellation rate of 50 percent was lower than the 60 percent rate in the third quarter of 2006 but well above the 34 percent rate in the second quarter of this year.
“The business risk for home builders is high and rising because of all the bad news out there,” said Joseph Snider, an analyst at Moody’s Investors Service in New York.
KB Home stock added 62 cents, to $24.71, on the New York Stock Exchange.
In other earnings news:
– Accenture Ltd., the world’s second-biggest consulting firm, said fourth-quarter profit fell less than analysts estimated as the company took on more outsourcing work in Asia.
The Bermuda-based firm reported that net income dropped 8.5 percent, to $316.8 million, or 50 cents a share, from $346.4 million, or 56 cents a share, a year earlier. Wall Street was expecting a loss of 48 cents a share for the most recent quarter. Sales, before reimbursements from clients, rose 29 percent, to $5.11 billion.
The report came out after the close of trading.
– Rite Aid Corp. said its second-quarter loss widened and said it expects to lose more than it previously forecast for the year.
The nation’s third-biggest drugstore chain, which is integrating its recently acquired Brooks and Eckerd stores into its operations, said its loss attributable to common shareholders was $78.2 million, or 10 cents a share, compared with a loss of $8.2 million, or 2 cents a share, a year ago. The latest loss was 4 cents a share more than analysts expected. Revenue jumped almost 54 percent, to $6.6 billion.
Camp Hill, Pa.-based Rite Aid said it expects to lose between $78 million and $161 million for the year, compared to its earlier prediction of a loss of $47 million to $129 million.
Shares of Rite Aid slipped 21 cents, to $4.84, on the NYSE.
