The expansion is expected to affect earnings growth in fiscal2007, a company official said, but the results of those effortsshould help per share earnings increase by 30% or more in 2008. Forfiscal 2007, per share earnings are projected to range between$2.41 and $2.65.

Guitar Center, which operates 198 stores in 42 states, lost $40million, or $1.36 per share in the quarter ended Dec. 31, 2006 assoft sales cut into profits. Last year, the Westlake Village, CAretailer 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 yearwere not as strong as we would have wanted because of the softsales environment we experienced," Marty Albertson, chairman andCEO said in a conference call. Albertson said the company'swebsite, Musicians Friend, which opened earlier in the year,produced lower than expected sales results, as did Guitar Center'scatalog.