When Best Buy (NYSE: BBY) blew through analyst estimates earlier this week and made a larger-than-expected profit, many industry watchers probably wondered what Best Buy is doing right that fellow retailer Circuit City (NYSE: CC) is doing wrong. Now we know: Circuit City saw sales plummeted 3.1% as Peter reported this morning in another quarterly loss as it continued losing market share to its much larger rival.Best Buy is probably not only taking market share away from Wal-Mart -- the world's largest retailer -- but it's stomping Circuit City into the ground as well. Circuit City CEO Phil Schoonover said his company's poor performance in its most recent quarter was due to the fact management "underestimated the financial impact from the disruption of our transformation work." What else is the company transforming? From a slightly-bad retailer to a completely inept one?
I'm not so sure how Schoonover has kept his job with three consecutive quarterly disappointments, but perhaps 2008 will see a brighter future for the retailer. Best Buy has its success formula pretty much down perfect, and the immense challenge Circuit City will face should be quite formidable next year.
But, there may be signs of things to come. Take this: Best Buy's quarterly report this week said sales surged on flat-panel televisions (hopefully, profitable sales), which Circuit City continues to say -- every quarter -- that flat-panel television pricing depression is contributing to its financial woes. How can these types of sales be diametrically opposed at the two retailers? Something's fishy there.











Reader Comments (Page 1 of 1)
12-21-2007 @ 2:47PM
TX CHL Instructor said...
No tears from me over Circuit City. Since I'm too old to work there, I'm too old to shop there.
And if you don't believe in age discrimination, you just haven't been around long enough. Circuit City is now run entirely by children with insufficient real world experience. The (age discrimination) door swings both ways.
12-22-2007 @ 12:31PM
BdoomD said...
I appreciate your feedback about being children. I work for CC and the one thing that people are overlooking that this is not the stores fault. Upper managment continues to distract us from the job at hand. The transformation work was hard.
12-22-2007 @ 10:22PM
walt runyan said...
I'm not surprised that Circuit City is losing sales to Best Buy. MY wife and I were shopping for a plasma tv the other day. We waited for over 1/2 hour for someone to help us. One of the employes explained that staffing is low during the day (when we were there) and higher at night. You would think CC would have adequate help all day, especially during the holidays.
12-23-2007 @ 1:36PM
TampaMikey said...
Exactly what is the transformation work that you are referring to?
12-23-2007 @ 11:02PM
Wolfster said...
They're learning how to disappear! LOL
After waiting over 20 minutes for help that never arrived, I told the ditz at the service desk that I would never set foor in CC again. They deserve to die after their stupid decision to fire their best people and keep the deadwood - starting with that idiot at the top.
12-26-2007 @ 3:20PM
hmmm said...
Wow, I just left Circuit City after one full year as a store director. This is a giant pinball machine. One week is one thing, then the next week it all changes to whatever Best Buy is doing, then it changes to something that I have no clue why we are doing it. Crazy reactions to some very outlandish ideas.
12-27-2007 @ 12:37PM
chris said...
I am someone whom worked for Best Buy 1995-2001 and Circuit City 2001-2007. I was Relieved of my duties from C.C. and to this day i am really lost when it comes to what they are trying to do. I was at Best Buy during some trying times and Phil Schoonover was a player with Best Buy turining around and becoming a Global Leader in technology. Well a few years ago, Circuit City made a decision to stop paying its employees commission, and it was at that time in 2003, they were going to be in a year of decline in order to turn it all around. The next few years was a continuation of "next year we will turn it around" and either Phil Schoonover is the most briliant person alive and we will see some dramatic change, or he is single handily destroying one of the strongest retailers of the 90's and early 2000's in Circuit City. Either way he was credited in Best Buys success and some how, now at Circuit City is still developing his success of Best Buy. I have talked to District Staff about going back to Circuit City as the times i spent there were some of the best of my life and i was taught alot about doing business. It is the Circuit City of 2007 which will lead the company into the depths of bankruptcy. I and some people no longer there could have championed the change that was set forth by the administration, but we didnt get the chance to, since C.C. started hiring really bad Best Buy managers and using them to enact the change. Nest time your at a Circuit City and someone upsets you or does not treat you well, ask them if they ever worked for Best Buy, and i guarantee the answer is yes. The new employee's being hired are not necessarily cheaper help, just Best Buys worst and Circuit is trying to follow Best Buy so badly, it hires up all Best Buy's scum and waste. I wish Circuit City all the luck, even as a shareholder of both companies, i did my shopping this year at Best Buy, since most of my fellow great managers now work for Best Buy, and Best Buy helped me for all my Holiday needs. -Chris in Illinios
12-27-2007 @ 1:03PM
Frank said...
I too am in a supervisory roll at CC. I leave everyday scratching my head. Wondering when it will get better. When this so call transformation will finally be over. What makes things worse is that I took a $2 pay cut to become a supervisor. More responsibility less money. I work for a store director who turns his head when his other managers mess up. The executive management is laughing all the way to the bank. Instead of giving money to those who are ruining this company how about giving it to those who work their butts off to make CC a great place to shop.
12-30-2007 @ 1:15AM
Stan21 said...
I have friends who work at circuit city. Yes, they say it is a "run this way, no run that way" environment. In the store I know best, there has been 90% turnover since June, and almost everyone working there are kids, e.g. my friends supervisor is 19 years old. And their newest game is they hound their employees whenever someone is talking to another, even if there isn't a customer within the store. Of course the employees get even, and laugh about it once they are out the door each day, for there are so many ways to subtly kill a sale, or fail to close a sale. The stock is toast, it's under $5, a far cry from what was offered for the co. last year in a buyout - $17. Why, cuz the mgt thought they could rape their employees emotionally and the company's coffers financially. And when someone tells you that they are doing well to budgets, this store had a 20+% budget decrease from a year ago. As another example, there are a large number of incorrectly tagged items, because the new kids don't understand the differences between subtly different products. Great way to build distrust within the customer base. And for the kids, it is a great training ground to learn about selling, put some money in their pockets for pursuit of the opposite sex, and learn how to not run a biz. We shall see, but it doesn't look good.
1-02-2008 @ 8:32PM
Rich said...
i have worked for cc for about 4 1/2 years. I got hired after the layoff of 03 and have worked my way to a supervisor spot. when i got hired the store was run by one of the best store directors i hav ever seen we would always make budget and crush numbers... why because the employees where happy and wanted to work... now everyone hates our new store director and is always looking for new jobs... and about me i just got passed up for a promotion that they gave to some 19 yr old kid who has bearly been with the company a little over 2 years... u tell me whats going on