Circuit City posts wider loss
Circuit City Stores Inc. withdrew its outlook for the full fiscal year and posted a wider second-quarter loss Monday as it looked toward a holiday shopping season that had even the least vulnerable retailers worried.
Shares in the nation’s second-largest consumer electronics retailer fell more than 20% to their lowest point in 22 years as investors worried about Circuit City’s future and analysts questioned how long vendors would keep supporting the company’s turnaround efforts.
The Richmond, Va.-based retailer, which has seen only one profitable quarter since the second quarter of 2007, said it planned to focus on making customer service state of the art as it battled sluggish sales, poor traffic and heightened competition for customers who are already buffeted by the poor economy.
“We realize the performance of this company is unacceptable to all of our stakeholders and that it is imperative that we take the right steps to accelerate our turnaround,” James A. Marcum, vice chairman and the new acting president and chief executive, said in a conference call with investors.
Circuit City -- which replaced its CEO last week -- said it lost $239.2 million, or $1.45 a share, in the three months ended Aug. 31, compared with a loss of $62.8 million, or 38 cents, in the same quarter last year.
Excluding $73 million of non-cash asset impairment charges, the loss came to $162.7 million -- better than earlier forecasts for a loss from continuing operations of $170 million to $185 million.
Sales declined 10% to $2.39 billion, with consolidated same-store sales falling 13.3%.
Analysts polled by Thomson Reuters had expected a loss of $1.04 a share and sales of $2.53 billion.
Circuit City is undertaking a comprehensive review of its business and identifying key initiatives for the holiday season, including improving customer service and inventory on key items and launching a marketing brand campaign.
Circuit City shares fell 29 cents, or 21.2%, to $1.08 on Monday, after hitting a low of $1.01 earlier in the session. The stock had not traded that low since 1986.
