Sept. 20 (Bloomberg) -- Circuit City Stores Inc., the second-largest U.S. consumer-electronics chain, reported a wider loss than analysts estimated after it failed to lure customers with lower prices on flat-panel televisions and computers. The shares had their biggest decline in more than five years.

The loss was $62.8 million, or 38 cents a share, for the second quarter ended Aug. 31, compared with net income of $10 million, or 6 cents a share, a year earlier. Sales dropped 6.2 percent to $2.64 billion, the retailer said today in a statement, also trailing estimates.

``The quarter was horrendous,'' said Colin McGranahan, an analyst with Sanford C. Bernstein in New York. ``It's hard to lose that much money without just about everything going wrong.'' He doesn't own the shares.

Analysts estimated a loss of 12 cents, the average of 22 projections compiled by Bloomberg, while 15 predicted revenue of $2.79 billion.

Circuit City is losing market share to larger rival Best Buy Co., which reported this week profit that topped analysts' estimates and increased its annual forecast on computer and international sales. Circuit City cut 10 percent of its U.S. workforce this year, including 3,400 store employees who were replaced with people willing to work for less.

``We expected the changes to be disruptive in the near term, but necessary to deliver long-term profitable growth,'' Philip Schoonover, the retailer's chief executive officer, said in the statement.

Shares Fall

Circuit City fell $1.90 to $8.67, the lowest in more than four years, at 4:07 p.m. in New York Stock Exchange composite trading. The 18 percent drop was the biggest since February 2002. It slumped 54 percent this year. Today, Best Buy lost 2.2 percent to $46.44 and is down 5.6 percent in 2007.

The company expects a loss for the full year and predicts the third-quarter loss will narrow from the second period. Circuit City forecast cost savings of $150 million from selling, general and administrative expenses this year. That will rise to $200 million next year.

The retailer will evaluate any new acquisition offers. The company turned down two buyout proposals from private-equity groups, saying the offers were inadequate.

Circuit City said it will consider slowing the pace of store openings and evaluate its real estate holdings.

Same-Store Sales

Sales at stores open at least a year fell 7.9 percent in the quarter. Retailers use same-store sales to measure the health of older locations.

Circuit City is facing increased competition from Wal-Mart Stores Inc., the world's biggest retailer, which has devoted more store space to flat-panel TVs. This was Circuit City's fourth straight quarterly loss.

``Their entire TV category was down double digits,'' McGranahan said. ``They may not have been promotional enough given how much they lost in market share to Best Buy.'' McGranahan rates Circuit City ``market perform.''

In June, the Richmond, Virginia-based retailer said financial results for the ``near term'' would be volatile and withdrew its annual forecast. Circuit City is struggling to compete with Best Buy, which has more stores in prime locations and higher customer service ratings.