Circuit City Posts Huge 3Q Loss
12-21-07, 05:39 PM
#1
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Circuit City Posts Huge 3Q Loss
Circuit City Posts Huge 3Q Loss
From Associated Press
December 21, 2007 6:03 PM EST
RICHMOND, Va. - Holiday shopping might not be enough to save the fourth quarter for struggling electronics retailer Circuit City Stores Inc.
Executives with the Richmond-based company warned Friday that they expect a modest loss in the period, despite America's traditional holiday hunger for televisions and other high-tech gadgets.
Coupled with a wider-than-expected third-quarter loss, the gloomy prediction prompted Wall Street to question whether Circuit City should give up trying to fix its numerous problems and hang out the "for sale" sign.
The nation's second-biggest consumer electronics retailer saw shares tumble Friday as investors reacted to a quarterly loss driven by lower extended warranty sales and business interruptions the company blamed on ongoing restructuring efforts.
"Clearly we are very dissatisfied," Chief Executive Philip Schoonover told analysts during a conference call. Schoonover said the company underestimated the financial impact of cost-saving initiatives on sales. "Our current focus is to rebuild our selling culture," he said.
It's stock fell $1.91, or 28.68 percent, to $4.75 in trading Friday, a 52-week low.
The results came three days after larger rival Best Buy Co. reported its third-quarter profit jumped 52 percent, ahead of analyst expectations for the Richfield, Minn., retailer.
For the three months ended Nov. 30, Circuit City's losses ballooned to $207.3 million, or $1.26 per share, from $20.4 million, or 12 cents per share, a year ago. Excluding tax-related accounting items, losses totaled 64 cents per share in the latest period.
Sales slipped 3 percent to $2.96 billion from $3.06 billion a year earlier, with sales at stores open at least a year falling 5.6 percent.
Analysts were clearly disappointed.
Chris Horvers from Bear Stearns asked Schoonover in the conference call if he had considered throwing in the towel and looking for a buyer. "It seems every quarter comes as surprise as to the amount of disruption," Horvers said.
Schoonover, however, maintained Circuit City is on the right track. "We're implementing the right initiatives to lead to profitability and sustained growth," he said. "We're staying the course on our longer-term strategic initiatives."
Circuit City also said it has received a commitment to more than double its $500 million credit line to $1.3 billion.
The company also said it planned to open 61 to 63 new and relocated U.S. Superstores in fiscal 2008; two-thirds of the openings will be 20,000-square-foot stores, called "The City," with a new look and different fixtures, lighting and product selection. It also expects to open 50 to 60 new and relocated stores in fiscal 2009.
In the third quarter, the company said sales improved strongly in several product categories, but those gains were offset by declining purchases of other electronics gear. For instance Circuit City saw a double-digit increase in video gaming products.
Likewise, significant sales decreases in tube and projection televisions more than offset double-digit sales growth in flat-screen televisions. Sales of camcorders and DVD hardware fell by double digits.
Revenue from Firedog, the company's PC services and home-installation business, increased 29 percent, Circuit City said. Sales of extended warranties were $67.4 million, compared to $103.3 million in the same period last year.
While Circuit City laid off 3,400 high-paid workers and replace them with lower-paid new hires in March, it announced this week the approval of millions in cash incentives to retain its top talent following the departure of several key executives over the past year. Executive vice presidents could claim retention awards of $1 million each and senior vice presidents could get $600,000, provided they stay with the company until 2011, according a filing with the U.S. Securities and Exchange Commission.
The bonuses didn't sit well with Merrill Lynch analyst Danielle Fox, who questioned whether Circuit City should be focusing on incentives for the people who sell its products in stores.
"It seems like the top executives are getting paid more for poor performance," Fox said. "I don't see really what the incentive is for them to perform, to stay with Circuit City."
Schoonover said the bonuses are essential to keep together a team he spent three years assembling. He added that Circuit City offers competitive starting wages for store employees and gives performance bonuses to supervisors.
Signature
From Associated Press
December 21, 2007 6:03 PM EST
RICHMOND, Va. - Holiday shopping might not be enough to save the fourth quarter for struggling electronics retailer Circuit City Stores Inc.
Executives with the Richmond-based company warned Friday that they expect a modest loss in the period, despite America's traditional holiday hunger for televisions and other high-tech gadgets.
Coupled with a wider-than-expected third-quarter loss, the gloomy prediction prompted Wall Street to question whether Circuit City should give up trying to fix its numerous problems and hang out the "for sale" sign.
The nation's second-biggest consumer electronics retailer saw shares tumble Friday as investors reacted to a quarterly loss driven by lower extended warranty sales and business interruptions the company blamed on ongoing restructuring efforts.
"Clearly we are very dissatisfied," Chief Executive Philip Schoonover told analysts during a conference call. Schoonover said the company underestimated the financial impact of cost-saving initiatives on sales. "Our current focus is to rebuild our selling culture," he said.
It's stock fell $1.91, or 28.68 percent, to $4.75 in trading Friday, a 52-week low.
The results came three days after larger rival Best Buy Co. reported its third-quarter profit jumped 52 percent, ahead of analyst expectations for the Richfield, Minn., retailer.
For the three months ended Nov. 30, Circuit City's losses ballooned to $207.3 million, or $1.26 per share, from $20.4 million, or 12 cents per share, a year ago. Excluding tax-related accounting items, losses totaled 64 cents per share in the latest period.
Sales slipped 3 percent to $2.96 billion from $3.06 billion a year earlier, with sales at stores open at least a year falling 5.6 percent.
Analysts were clearly disappointed.
Chris Horvers from Bear Stearns asked Schoonover in the conference call if he had considered throwing in the towel and looking for a buyer. "It seems every quarter comes as surprise as to the amount of disruption," Horvers said.
Schoonover, however, maintained Circuit City is on the right track. "We're implementing the right initiatives to lead to profitability and sustained growth," he said. "We're staying the course on our longer-term strategic initiatives."
Circuit City also said it has received a commitment to more than double its $500 million credit line to $1.3 billion.
The company also said it planned to open 61 to 63 new and relocated U.S. Superstores in fiscal 2008; two-thirds of the openings will be 20,000-square-foot stores, called "The City," with a new look and different fixtures, lighting and product selection. It also expects to open 50 to 60 new and relocated stores in fiscal 2009.
In the third quarter, the company said sales improved strongly in several product categories, but those gains were offset by declining purchases of other electronics gear. For instance Circuit City saw a double-digit increase in video gaming products.
Likewise, significant sales decreases in tube and projection televisions more than offset double-digit sales growth in flat-screen televisions. Sales of camcorders and DVD hardware fell by double digits.
Revenue from Firedog, the company's PC services and home-installation business, increased 29 percent, Circuit City said. Sales of extended warranties were $67.4 million, compared to $103.3 million in the same period last year.
While Circuit City laid off 3,400 high-paid workers and replace them with lower-paid new hires in March, it announced this week the approval of millions in cash incentives to retain its top talent following the departure of several key executives over the past year. Executive vice presidents could claim retention awards of $1 million each and senior vice presidents could get $600,000, provided they stay with the company until 2011, according a filing with the U.S. Securities and Exchange Commission.
The bonuses didn't sit well with Merrill Lynch analyst Danielle Fox, who questioned whether Circuit City should be focusing on incentives for the people who sell its products in stores.
"It seems like the top executives are getting paid more for poor performance," Fox said. "I don't see really what the incentive is for them to perform, to stay with Circuit City."
Schoonover said the bonuses are essential to keep together a team he spent three years assembling. He added that Circuit City offers competitive starting wages for store employees and gives performance bonuses to supervisors.
Signature
12-21-07, 06:47 PM
#2
DVD Talk Legend
They pretty much need an overhaul in every way I can think of. Their main competitor is better them in every way.
Last edited by cdollaz; 12-21-07 at 06:56 PM.
12-21-07, 07:10 PM
#3
DVD Talk Hero
The bonuses didn't sit well with Merrill Lynch analyst Danielle Fox, who questioned whether Circuit City should be focusing on incentives for the people who sell its products in stores.
12-21-07, 08:00 PM
#4
DVD Talk Legend
Not suprising at all.
I worked in retail for more years than I care to remember. Circuit City is one of the most poorly merchandised stores I have ever seen. Poor selections, poor fixtures, poor signs etc. If I had run one of my departments like these stores are, I would have been fired.
Not sure why they can figure out how to merchandise and sell things that people actually want.
I worked in retail for more years than I care to remember. Circuit City is one of the most poorly merchandised stores I have ever seen. Poor selections, poor fixtures, poor signs etc. If I had run one of my departments like these stores are, I would have been fired.
Not sure why they can figure out how to merchandise and sell things that people actually want.
12-21-07, 08:35 PM
#5
DVD Talk Special Edition
They had closed down one by me (right next to a mall) and re-opened it this year (10 miles down the road from the mall or so). I was absolutely shocked how badly they had made the DVD and CD sections for browsing, even compared to the old store.
12-21-07, 08:53 PM
#6
Schoonover, however, maintained Circuit City is on the right track. "We're implementing the right initiatives to lead to profitability and sustained growth," he said. "We're staying the course on our longer-term strategic initiatives."
Yeah, ok. I'll do the Cliff Note version:
"We're fucked. I just don't want to tell y'all yet."
Yeah, ok. I'll do the Cliff Note version:
"We're fucked. I just don't want to tell y'all yet."
12-21-07, 09:21 PM
#7
DVD Talk Limited Edition
Originally Posted by ernestrp
Circuit City Posts Huge 3Q Loss
While Circuit City laid off 3,400 high-paid workers and replace them with lower-paid new hires in March, it announced this week the approval of millions in cash incentives to retain its top talent following the departure of several key executives over the past year. Executive vice presidents could claim retention awards of $1 million each and senior vice presidents could get $600,000, provided they stay with the company until 2011, according a filing with the U.S. Securities and Exchange Commission.
While Circuit City laid off 3,400 high-paid workers and replace them with lower-paid new hires in March, it announced this week the approval of millions in cash incentives to retain its top talent following the departure of several key executives over the past year. Executive vice presidents could claim retention awards of $1 million each and senior vice presidents could get $600,000, provided they stay with the company until 2011, according a filing with the U.S. Securities and Exchange Commission.
12-22-07, 05:34 AM
#9
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At one point Circuit City used to be shoppable but it's a mess now. I've yet to see the main registers open locally even during the holiday season. Their cash registers are awfully slow. Employees are generally worthless and unmotivated.
12-22-07, 12:26 PM
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Good for them. I hate their fucking stores. I can't ever find a fucking thing I want on release day, their organizational skills are severely lacking, and the cash register area is a complete cluster fuck.
I wrote to their company once about the utter lack of organization in their stores, without expletives, and never received a response. Go figure.
Fuck them, and fuck their executives for firing employees to hire new employees at a cheaper rate all the while getting bonuses for playing 18 holes on a golf course while their companies bottom line is going directly in the shitter.
I wrote to their company once about the utter lack of organization in their stores, without expletives, and never received a response. Go figure.
Fuck them, and fuck their executives for firing employees to hire new employees at a cheaper rate all the while getting bonuses for playing 18 holes on a golf course while their companies bottom line is going directly in the shitter.
12-22-07, 01:55 PM
#13
But they had a great deal on the Bond Ultimate Collections.
12-22-07, 01:58 PM
#14
Moderator
Note to Circuit City: when customers come in to buy an item like a DVD and a CD they shouldn't have to wait in the customer service line behind grandma making a return.
12-22-07, 02:46 PM
#15
12-22-07, 04:52 PM
#17
DVD Talk Legend
Originally Posted by ernestrp
Circuit City Posts Huge 3Q Loss
While Circuit City laid off 3,400 high-paid workers and replace them with lower-paid new hires in March, it announced this week the approval of millions in cash incentives to retain its top talent following the departure of several key executives over the past year. Executive vice presidents could claim retention awards of $1 million each and senior vice presidents could get $600,000, provided they stay with the company until 2011, according a filing with the U.S. Securities and Exchange Commission.
While Circuit City laid off 3,400 high-paid workers and replace them with lower-paid new hires in March, it announced this week the approval of millions in cash incentives to retain its top talent following the departure of several key executives over the past year. Executive vice presidents could claim retention awards of $1 million each and senior vice presidents could get $600,000, provided they stay with the company until 2011, according a filing with the U.S. Securities and Exchange Commission.
12-22-07, 07:48 PM
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But where's all the love for their utter incompetence? CC is the only place I can price match ads that are clearly mis-prices and use coupons. Not only that, because of the horrible way they run the website/ B&M store pricing, I was able to use a web only instant discount plus a web only 10% off coupon, then picked the item up in store and had them use a $40 off B&M only coupon on top of that. I paid ~ $340 for a $500 item. They had 2 open box units for $410.
12-23-07, 11:03 PM
#21
I'll never forget the time the sales kid walked away from me and wouldn't sell me a sony TV because I wouldn't buy the extended warranty to go with it. He kept telling me I didn't understand and I kept saying I know what an extended warranty is, I don't want it. I was so ticked by his arrogance when he walked off.
Then there was the Friday evening where four of the sales staff were doing a slam dance in the CD department for all to see.
I'm not surprised they're doing so badly.
Then there was the Friday evening where four of the sales staff were doing a slam dance in the CD department for all to see.
I'm not surprised they're doing so badly.
Last edited by Pizza; 12-23-07 at 11:05 PM.
12-24-07, 12:06 AM
#22
If they renamed Circuit City to Transistor Ghetto, they'd get more business.
12-24-07, 12:44 AM
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Looks like CC drank some bad water and has come down with Speedyzuma's Revenge. 
Good, I was just telling my father today about how piss-poorly run and organized their stores always are after a very pleasant experience at Best Buy this morning. Circuit City's online-buy-instore-pickup thing absolutely blows, Best Buy has them outmatched in every facet.
Good, I was just telling my father today about how piss-poorly run and organized their stores always are after a very pleasant experience at Best Buy this morning. Circuit City's online-buy-instore-pickup thing absolutely blows, Best Buy has them outmatched in every facet.
