Circuit City Agrees to Meet with Wattles4 Apr, 2008 By: Erik Gruenwedel
Fiscally challenged Circuit City Stores Inc. April 4 said its board would meet with dissident shareholder Mark Wattles regarding his management concerns and the consumer electronics retailer's strategies for the future.
In a letter to Wattles, Mikael Salovaara, lead director for Circuit City, said the meeting would help promote a “more productive” dialogue between the two parties, according to a regulatory filing.
No timetable for the meeting was disclosed.
Wattles, who co-founded Hollywood Video and then sold it to Movie Gallery in 2005 for $1.1 billion, has taken a page from maverick investor Carl Icahn's playbook in how to rattle a company's senior management.
After acquiring 6.5% stake in Circuit City, Wattles began publicly questioning the retailer's turnaround strategies, including leadership of CEO Phil Schoonover.
Wattles employed a similar strategy with bankrupt Denver-based retailer Ultimate Electronics.
The Las Vegas-based executive continues to operate 20 Hollywood stores under a license agreement with bankrupt Gallery, which Gallery is attempting to rescind. Wattles has also expressed interest in submitting an alternative restructuring plan for Gallery.
In February, his investment company, Wattles Capital Management LLC, submitted a list of board nominees and earlier this week, Wattles, in a letter, called Circuit City's restructuring plans “disastrous,” demanded the company put itself up for sale and fire Schoonover.
Salovaara questioned why Wattles wouldn't allow his board nominees to meet individually with the nominating committee of Circuit City's board without imposing “unusual and unreasonable” conditions.
He also said Wattles “may not have a full understanding of the company's current strategy and challenges.”
Circuit City's shares have fallen more than 70% over the past year as quarterly results continue to disappoint, especially when compared with rival Best Buy Co.
December revenue, a benchmark for most retailers, plunged nearly 9% as same-store (open at least a year) sales fell more than 11%.
News of a proposed meeting sent shares of Richmond, Va.-based Circuit City up 6% Friday afternoon to $4.78 per share.
Circuit City reports financial results April 9.