KB Home surprised Wall Street Friday by reporting that its fiscal third-quarter loss had quadrupled from a year ago as revenue fell by 56 percent.
The Los Angeles-based homebuilder reported a net loss of almost $145 million (-$1.87 a share) for the three months ended Aug. 31. Revenue fell to nearly $682 million from $1.54 billion as sales across most markets were poor.
The results did include a pretax charge of $82 million to write down the value of inventory and joint ventures. Even so, analysts polled by Thomson Reuters had predicted a loss of only $1.22 per share on revenue of $735 million.
A year ago, the company reported a $35.6 million (-46 cents) loss that would have been a loss of almost $479 million had the company not recorded a large gain from selling its French division.
Chief Executive Jeffrey Mezger blamed tight lending standards and competition from rising foreclosures for the poor quarter. Net orders for new homes fell 66 percent to 1,329 units as the company offered fewer sales incentives and discounts.
"These difficult conditions have now been exacerbated by the recent, unprecedented turmoil in financial and credit markets, and it is too early to assess whether the federal government's proposed interventions will be effective," Mezger said in a statement, noting that half of his company's homebuyers backed out of their purchase contracts during the quarter.
The company announced plans to start offering smaller and more affordably priced models.
KB Home shares were down 15 cents, or 1 percent, to $21.01 in morning trading on the New York Stock Exchange.
For reprint and licensing requests for this article, CLICK HERE.