Circuit City reports sales swoon in December

Circuit City Stores Inc., the second-largest U.S. consumer-electronics chain, said Monday that December sales fell 8.9% after holiday season discounts failed to attract shoppers.

Sales in stores open at least a year declined 11.4%. Total sales dropped to $1.92 billion from $2.10 billion a year earlier, according to the Richmond, Va.-based company.

Customers defected after Circuit City fired 10% of its U.S. employees, replacing them with people willing to work for less. Revenue and earnings suffered as the new employees struggled to sell service packages and warranties, among the most profitable items that electronics retailers offer.

In the three months that ended Nov. 30, sales in older stores fell 5.6%, Circuit City said Dec. 21. Same-store sales are considered a key measure of a retailer’s performance because they exclude locations that have recently opened or closed.

Sales figures for all retailers in November and December may show an increase of 2.5% or less, the slowest gain since 2004, according to an International Council of Shopping Centers forecast. Many retailers will report December sales Thursday.

Shares of Circuit City rose 27 cents, or 6.9%, to $4.21.