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Circuit City's death spiral begins: Closing 155 stores and exiting markets

Brian White — Mon, 03 Nov 2008 09:40:00 EST

Filed under: Bad News, Circuit City Stores (CC)

As The Doors' Jim Morrison once sang, This is the end, retailer Circuit City Stores, Inc. (NYSE: CC) now sings the lyrics, referring to its declining business. As expected, the second-largest consumer electronics chain in the U.S. will be closing 155 stores across the U.S. and even exit 12 markets completely. Perhaps the sale of those closed locations and the shuttering of all those employees will put the retailer back into the black, if only slightly.

Those 155 stores? They represent 20% of the company's overall locations. In order to conserve cash and try to break over the $1/share level again (CC shares closed at $0.26 Friday), the retailer will lay off thousands of employees as it closes 155 stores. While this may not spell the start of profitability for the retailer, it has to do something. Nobody wants to buy the company -- even at its fire sale stock price -- and competitor Best Buy, Inc. (NYSE: BBY) is literally pummeling it into the ground at every turn.

The retailer recently received a letter from the NYSE as its share price are violating the exchange's minimum covenants.

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Circuit City's death spiral begins: Closing 155 stores and exiting markets originally appeared on BloggingStocks on Mon, 03 Nov 2008 09:40:00 EST. Please see our terms for use of feeds.

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Circuit City's tips on back to school: why even bother?

Brian White — Mon, 18 Aug 2008 14:16:00 EST

Filed under: Rants and Raves, Marketing and Advertising, Circuit City Stores (CC)

While vultures continue to circle around the body of consumer electronics retailer Circuit City Stores, Inc. (NYSE: CC), the company is at least trying to look alive even though much of the world has left it for dead. Circuit City's latest travail is offering "back to school tips" to concerned parents, who, after reading Circuit City's tips-as-a-marketing-press-release, must think the retailer is on its last leg.

Apparently, many retailers believe the majority of the American public are seasonal procrastinators. The "rush to back to school" is not really a rush more than a shopping highlight for many retailers from apparel to computers to shoes to notebooks (the paper kind).

Circuit City's latest effort states some statistics as a lead-in for customers to come into their local Circuit City and shop for PCs and all the related garb that goes with them. As in, printers and ink and thumb drives ... oh my.

Circuit City's parting shot in its "back to school" montage was the mentioning of a gift card. In fact, you can email a gift card from your PC to your college student! Wow, how 2001-ish! I'm just confused on why Circuit City even participated in a "duh" survey like this to drum up a rather lackluster press release from a company that couldn't manage itself out of a shoebox.

Circuit City's tips on back to school: why even bother? originally appeared on BloggingStocks on Mon, 18 Aug 2008 14:16:00 EST. Please see our terms for use of feeds.

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Circuit City (CC) posts surprising 4Q earnings numbers

Eliza Popescu — Wed, 09 Apr 2008 12:18:00 EST

Filed under: Earnings Reports, Forecasts, Good news, Consumer Experience, Circuit City Stores (CC)

Shares of electronics retailer Circuit City Stores Inc. (NYSE: CC) have been soaring this morning after the company reported an unexpected fourth-quarter profit. It was the first time in the last six quarters when the retailer was able to post a quarterly profit.

For the quarter, Circuit City announced that its profit climbed to $4.85 million, or 3 cents a share, up from a loss of $4.25 million, or 3 cents, reported in the same period a year ago. The company's move to lay off employees to cut costs proved efficient in its fight against weak sales. Analysts were expecting the retailer to show a loss of 7 cents per share in the quarter.

Taking a look at the company's quarterly revenue, we see a decline of 8% to $3.65 billion, compare with $3.95 billion last year. For this period, the second-largest U.S. electronics retailer posted a drop of 10.4% in same-store sales. Quarterly revenue numbers missed analysts' predictions for sales of $3.79 billion, according to Thomson Financial.

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Circuit City (CC) posts surprising 4Q earnings numbers originally appeared on BloggingStocks on Wed, 09 Apr 2008 12:18:00 EST. Please see our terms for use of feeds.

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Circuit City sees home installation business slowdown

Brian White — Wed, 02 Apr 2008 17:14:00 EST

Filed under: Bad News, Best Buy (BBY), Circuit City Stores (CC)

Circuit City Stores, Inc. (NYSE: CC), the consumer electronics chains that continues to have earnings and profit meltdowns every quarter, may be seeing one of its more lucrative businesses slipping.

When it comes to offering services, the company's Firedog installation and service business is one of its most profitable. Similar to competitor Best Buy Inc. (NYSE: BBY)'s Geek Squad and Magnolia services businesses, this is how Circuit City makes a decent profit in the wake of slashed margins on many electronics products like flat-panel televisions.

But in Circuit City's case, the slowdown in home construction across the U.S. is having an effect on its installation business now -- so the main bandage on the wound is coming off. The company will be laying off 67 workers across the U.S. who specialize in pre-wiring new homes for sound and video. Although the retailer hopes to retain many of those workers in other areas within the company, my bet is that this won't happen.

There is no word on whether Best Buy's Magnolia installation business is being hit as the new housing construction business continues slowing across the U.S., but as the company reported Q4 earnings today, the weakness domestically and decline in same-store sales could indicate it would be hit as well.

Circuit City sees home installation business slowdown originally appeared on BloggingStocks on Wed, 02 Apr 2008 17:14:00 EST. Please see our terms for use of feeds.

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Circuit City grows credit line to $1.3 billion

Brian White — Thu, 07 Feb 2008 11:33:00 EST

Filed under: Competitive Strategy, Circuit City Stores (CC), Abercrombie and Fitch (ANF)

Electronics retailer Circuit City Stores Inc. (NYSE: CC) has upped its corporate credit line to the tune of $800 million, giving the troubled retailer an open credit facility of nearly $1.3 billion. It also set terms on the new credit facility to expire a little less than five years from now in January 2013. Circuit city also has the option of increasing that line by an additional $300 million should it need to get further in debt.

It's no surprise that the Richmond, Virginia retailer is taking out larger credit notes, as it may need to draw on the new line for capex and other expenditures soon. Perhaps a share repurchase to lower share dilution? The retailer's shares could certainly use propping up, which may give Mark Wattles some concern should he really be interested in acquiring the chain at some point in 2008.

Right now, Circuit City shares are trading at $4.72 and the company has a market cap of just over $794 million. It's amazing that the second-largest consumer electronics chain in the U.S. has a market cap below one billion, but based on a slew of horrid results in 2007, shares have tanked consistently in the last 12 months. Still, the company's locations, brand and inventory is easily worth more than the total market value of its shares, so it will be interesting to see what Circuit City does with the new credit line

Circuit City grows credit line to $1.3 billion originally appeared on BloggingStocks on Thu, 07 Feb 2008 11:33:00 EST. Please see our terms for use of feeds.

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Circuit City's website sees huge traffic in December

Brian White — Thu, 31 Jan 2008 13:37:00 EST

Filed under: Bad News, Competitive Strategy, Circuit City Stores (CC)

Although Circuit City Stores, Inc. (NYSE: CC) reported a horrible December in terms of sales and profits, the second-largest consumer electronics retailer in the U.S. was one of the top three online consumer electronics retailers in December, trailing leader Best Buy, Inc. (NYSE: BBY), but ahead of online auction giant eBay, Inc. (NASDAQ: EBAY).

Nielsen ratings figures put unique web visitors like this: Best Buy at 23.99 million, and Circuit City at 19.61 million. Figures for eBay weren't available (as some separate categories have to be measured together), but the real news was that Circuit City's December 2007 website traffic growth increased more than 20% from 2006's level. Best Buy's December 2007 visitor count rose only 9%.

Why couldn't Circuit City capitalize on such an impressive amount of unique holiday retail traffic? The failure of the retailer to make any sales gains this past holiday season just seems endemic of multiple failures and problems the company has at this time. While we wait on Circuit City CEO Phil Schoonover to be sacked from the corner office, perhaps a lingering, potential sale of the company will force the issue and Circuit City can get back to business. Profitable business, that is.

Circuit City's website sees huge traffic in December originally appeared on BloggingStocks on Thu, 31 Jan 2008 13:37:00 EST. Please see our terms for use of feeds.

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Circuit City launches social networking website

Brian White — Fri, 30 Nov 2007 11:31:00 EST

Filed under: Launches, Competitive Strategy, Circuit City Stores (CC)

Circuit City Stores, Inc. (NYSE: CC) has apparently been listening to all the media chatter this year centered around social networking and has decided to jump into the game. The second-largest consumer electronics chain in the U.S. has launched its new 'CityCenter' social networking website (within its regular website).

This new interactive website will let Circuit City customers compare experiences about certain products (and Circuit City itself, I'd imagine), find out pre-purchase information from real customers and seek out detailed advice on which products to buy.

In an age of pushing the highest-market electronics possible to the public, the open communication this will embody among Circuit City customers should prove helpful for those looking for the best products at the best prices. Kudos to Circuit City here. Yes, that's something I haven't stated all year. That is, until now.

Empowering consumers to trade real-world information outside of marketing fluff is a great way to build loyalty and give those consumers a feeling of being in charge -- which is just what Circuit City needs at this point in its life.
Not only will text be allowed, but the CityCenter website will allow photos, blog entries, and videos to be posted by visitors. In addition, the website will play host to complete customer forums.

Circuit City launches social networking website originally appeared on BloggingStocks on Fri, 30 Nov 2007 11:31:00 EST. Please see our terms for use of feeds.

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How to profit from Madden madness

Kevin Kelly — Mon, 13 Aug 2007 18:00:00 EST

Filed under: Products and Services, Competitive Strategy, Circuit City Stores (CC), Electronic Arts (ERTS), Stocks to Buy

Thousands of football fans and video game junkies will flock to stores tomorrow to buy the latest-and-greatest version of Madden, the indisputable leading brand in football video games. In the first week of sales, the game should sell at least 2 million copies.

From all of this Madden madness which should rise in coming weeks, there are two potential ways to make money: Electronic Arts (NASDAQ: ERTS) and Circuit City Stores (NASDAQ: CC).

Electronic Arts is the creator and owner of the Madden brand. Understandably, the success of the newest Madden in coming weeks should be directly correlated to the news flow for the stock. The company's third and fourth quarters should be incredible, not only attributable to Madden but also from the company's other popular games. The issue then becomes: is all of this priced into the stock? The answer to that question could go either way. While the stock is up about 10% so far in August, bulls in the stock argue that analyst estimates for the upcoming quarters remain low.

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How to profit from Madden madness originally appeared on BloggingStocks on Mon, 13 Aug 2007 18:00:00 EST. Please see our terms for use of feeds.

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Circuit City investors surprisingly holding onto shares

Brian White — Thu, 21 Jun 2007 00:05:00 EST

Filed under: Earnings Reports, Bad News, Best Buy (BBY), Circuit City Stores (CC)

Circuit City Stores (NYSE: CC)'s latest quarterly loss was expected and was slightly devastating to the company. After all, it is losing sales to larger competitor Best Buy (which had a bad quarter too /NYSE: BBY) and just can't seem to get its financial act in order after several product categories slowly but surely started sinking Circuit City's revenue late last year. As Peter Cohan pointed out nicely in a post yesterday, Circuit City could be losing money for years and years. The points Peter brings up are so valid it made me wonder why CC investors didn't throw their shares in the air and run for cover yesterday.

But they didn't. Circuit City investors apparently held onto shares yesterday and did not see fit to have a mass sell-off based on the company's latest round of horrid news. Now that's odd -- usually, this kind of news makes shareholders skittish and shares plummet after news of a bad quarter gets out. Sure, that notion changes depending on the industry, but we're talking about retail here. On top of that, it's "consumer electronics" retail, one of the most competitive areas in all of retail. Margins have shrunk in popular categories and things are a little messy at the moment. Still, holders of CC stock didn't run for the hills.

What do they see that makes this situation different? CC shares actually gained 0.3% yesterday on the bad quarterly performance news. Yes, CC shares are down this year almost 50% (ouch), so maybe going for another 10% would not have been a good thing for a company that has future potential but is mired in some retail softness and poor management decisions as of late. Anyone can cost-cut to drive profit back, and Circuit City's reaction to soft sales has been this -- but in the most unprofessional way possible. But I again ask -- what do CC investors see for the company in the future? A possible private equity buyout in the works sometime in the next year? Perhaps that is why CC shares are not suffering right now. Without that, the "turnaround" that Circuit City management thinks will happen will be torturous and incredibly hard, without any guarantee of success.

Circuit City investors surprisingly holding onto shares originally appeared on BloggingStocks on Thu, 21 Jun 2007 00:05:00 EST. Please see our terms for use of feeds.

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Analyst initiations 12-8-06: Monster initiated with Above Average

Melly Alazraki — Fri, 08 Dec 2006 10:50:00 EST

Filed under: Analyst Upgrades and Downgrades, Best Buy (BBY), Circuit City Stores (CC), Monster Worldwide (MNST), Palm Inc (PALM), Electronic Arts (ERTS)

MOST NOTEWORTHY: Monster Worldwide (MNST) and Electronic Arts (ERTS) were the notable companies initiated today:

Caris initiated Monster Worldwide Inc. (NASDAQ:MNST) with an Above Average rating and $52 target and believes the stock provides exposure to strong secular growth in online advertising and is a pure play with online help-wanted classified advertising; additionally,
Needham started Electronic Arts Inc. (NASDAQ:ERTS) with a Hold, based on valuation.

OTHER INITIATIONS:

Best Buy Company Inc. (NYSE:BBY) and Circuit City Stores Inc. (NYSE:CC) were initiated with Outperform ratings at Cowen; they believe Best Buy is well-positioned for market share gains and operating margin opportunities and that Circuit City is in the early stages of a turnaround.
Business Objects (NASDAQ:BOBJ) was initiated with a Buy rating and $45 target at Jefferies, citing the likelihood of Business Objects outperforming the consensus estimates through 2007, but they also see limited downside if the company does not get acquired.
Palm Inc. (NASDAQ:PALM) was started at UBS with a Neutral rating and $15.50 target.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Analyst initiations 12-8-06: Monster initiated with Above Average originally appeared on BloggingStocks on Fri, 08 Dec 2006 10:50:00 EST. Please see our terms for use of feeds.

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