News and Reviews....

    Is Circuit City Up For Sale ?  April 2008

 By Bob Lieto

A giant retailer going up for sale does not change the way we do business at Custom Audio-Video, but a recent report that retailer Circuit City reported a slim profit this past quarter, and rumors that their hiring of  Goldman Sachs to look into possible deals, becomes something of interest, at least.

Starting in 2006, Circuit City had taken losses, one, in the way the volatile Flat Panel market was growing. It seemed that prices were changing as fast as the ink dried on the sales card. Competition between large manufacturers result in great pressure on the retailer to cut  costs. They started with personnel cuts and store closings. Laying off 3,400 highly paid workers, including some of its most experienced sales people, cutting away at High margin Home Theater Systems and warranties, that subsequently caused a decline in sales.

The call for CEO Phillip Schoonover to step down has been loud and it is lead by activist shareholder Mark Wattles, who has built up a 6.5% stake in the company in the past six months. Even though the slim profit surprised Wall Street, it is clear the company is struggling as revenue fell 8% to $3.65 billion. Sales at stores open at least a year have fell 10.4% in the first quarter.

Comment .....   It surprised me to see a company as large as Circuit City make some the mistakes it has in the past two years.  Cutting experienced sales people to qualify a bottom line, had the effect of tightening the noose. The quality of their knowledge bank diminished, the customers' experience became less streamline and had a negative effect in sales.. Someone should say I and step down for the sake of the company. Or maybe it is too late for the retailer, if taking into hand the economic climate of today.

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