Thursday, December 11, 2008
By Erik Gruenwedel | Posted: 07 Oct 2008
Fiscally challenged Circuit City Stores Oct. 7 said it is working with unnamed third-party advisors in an effort to drastically improve the No. 2 consumer electronics retailer’s performance.
Despite the notice, shares of the Richmond, Va.-based chain fell more than 15% to close at a 52-week low of 50 cents per share.
Spokesperson Bill Cimino said Circuit City suspended 16 of 26 planned store openings for fiscal 2009. It previously announced that all store openings slated for fiscal 2010 had been postponed.
“The management team, working together with the board of directors, is committed to preserving vendor and shareholder equity value in the company,” Cimino said.
He said it wasn’t policy to comment on possible changes in merchandising strategies of different departments, including packaged media and DVD.
Circuit City last week reported second-quarter (ended Aug. 31) losses of more than $239 million, compared to losses exceeding $62 million during the prior-year period.
The company, which embarked upon a comprehensive review of its entire operations, replaced CEO Philip Schoonover with vice chairman and acting president/CEO James Marcum.
Regardless of its intentions, Circuit City is attempting to rehabilitate itself at a time when consumer and investor confidence in retail is in a freefall, according to Edward Woo, media analyst with Wedbush Morgan Securities in Los Angeles.
He said Circuit City, which has posted just one profitable quarter since fiscal 2007, has tried for years to find an answer its fiscal challenges, with little success.
“As the stock market indicates, investors don't have a lot of faith and with the economy in such a weak state, it makes it that much harder,” Woo said. “They have long odds, to say the least.”