Either Circuit City Stores, Inc. (NYSE: CC) CEO Phil Schoonover is not getting any sleep these nights or he's sending his resume out to Monster.com (NYSE: MNST) -- or perhaps both. The nation's second-largest consumer electronics retailer reported Wednesday that it had lost $62 million in its second quarter, and the shares appropriately sunk to a four-year low as a result. Is the company doomed? I doubt it, but after rebuffing two private takeover offers in recent years, perhaps the third time is a charm.It's hard to think that Circuit City can turn around to its former glory at this point: competitor Best Buy, Inc. (NYSE: BBY) seems ti be killing it in every conceivable way, from strategic acquisitions to store growth. The chain can't seem to click with consumers or the marketplace these days, despite being a very decent place to shop for home electronics and the ever-growing PC market. Well, despite my recent perspective, anyway. Circuit City isn't clicking with Wall Street either, as its shares plummeted 17% just yesterday on its bad Q2 news. Are potential suitors lining up outside the board's meeting room with offers? Maybe. It's never been a better time, stock price-wise.
Schoonover said yesterday on the Q2 conference call that "I think we're doing the right things to grow the company in the long term." What exactly are those 'things,' Phil? The market wants and needs to know, and platitudes aren't cutting it any longer. And, even worse, the company stated that warranty contract sales also fell in the second quarter, which are pure profit in most cases. Although there are messes in the company right now related to labor practices and management changes, Circuit City has no laser focus on anything at the moment. The bet is how long investors are waiting to see that change before bigger changes are forced.
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Reader Comments (Page 1 of 1)
9-21-2007 @ 11:38AM
Jon said...
I would love to see what would happen if WalMart bought out Circuit City. Huge expansions and improvements could be made in WalMart stores and Circuit City could knock Best Buys socks off with lower prices and expanded lines. Just a thought, Jon
9-21-2007 @ 2:57PM
Kenneth R. Sciba said...
I worked for Circuit City in Roanoke, Virginia for just over 5 years between 1998-2002. Management was the reason for the season..."No surprises there. I've felt like that company has been circling the drain for years. Ditto with Lowe's; it's just a matter of time before all their mismanagement catches up with them."
Respectfully, Kenneth Sciba
9-29-2007 @ 7:16AM
Vivian Smith said...
It's no surprise that Circuit City is in a jam...they mislead buyers about payments and no interest times to pay...they only list their terms on the receipt of purchase and what a mess that is...one reads that they may be buying an item sold and returned...but with a new warranty...also the item can be a demo from the sales shelf...they tell you that you have a year without interest to pay...but when you get the bill you find out there is a minimum payment every month...you don't know this til you get the bill and then read about the product...how many people read the fine print on a receipt that is ten inches long...Circuit City is a fraud and trafficing in a grey, so called legal zone...never will I shop there again...have spent over $ 3000 in the last year in purchases...they deserve to go down the tube..dishonesty at it's greatest...by not telling the customre what is going on...I could never refer anyone to shop at Circuit City...duh!!!!!
9-27-2007 @ 12:08PM
Vivian Smith said...
It's no surprise that Circuit City is in a jam...they mislead buyers about payments and no interest times to pay...they only list their terms on the receipt of purchase and what a mess that is...one reads that they may be buying an item sold and returned...but with a new warranty...also the item can be a demo from the sales shelf...they tell you that you have a year without interest to pay...but when you get the bill you find out there is a minimum payment every month...you don't know this til you get the bill and then read about the product...how many people read the fine print on a receipt that is ten inches long...Circuit City is a fraud and trafficing in a grey, so called legal zone...never will I shop there again...have spent over $ 3000 in the last year in purchases...they deserve to go down the tube..dishonesty at it's greatest...by not telling the customre what is going on...I could never refer anyone to shop at Circuit City...duh!!!!!
10-26-2007 @ 3:10PM
Valerie said...
I am happy Circuit City is going down. They deserve it. I received a Tom Tom Navigation System last year for Christmas. I did not open it until a week later as I was out of town. When I finally did and spent a few weeks with it, I realized I was very unhappy. I took it back with the original packaging and gift receipt only to be told that since I was 31 days past the date of purchase I could not return it. Not even to exchange it for something else. I called the 1-800 number they gave me with no luck. What a joke that was. The return policy was on the back side of the receipt and almost cut off at the bottom. Definitely a shady company. I hope they go out of business soon. They deserve it!!!