Circuit City has bigger 2Q loss, withdraws outlook

Shares in the nation's second-largest consumer electronics retailer fell more than 20 percent and fell to its lowest point in 22 years as investors worried about Circuit City's future and analysts questioned how long vendors will keep supporting the company's turnaround efforts.

The Richmond, Va.-based consumer electronics retailer, which has seen only one profitable quarter since the second quarter of 2007, said it plans to focus on making customer service state of the art as it battles 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.

"The past several years have been difficult for this company. ... We must get back to the basics and, make no mistake, this is all about our customers."

Circuit City--which replaced its CEO last week--said it lost $239.2 million, or $1.45 per share, in the three months ended Aug. 31, compared with a loss of $62.8 million, or 38 cents per share, 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 between $170 million and $185 million.

Sales declined 10 percent to $2.39 billion from $2.64 billion, with consolidated same-store sales falling 13.3 percent.

Analysts polled by Thomson Reuters had expected a loss of $1.04 per share and $2.53 billion in sales.

But given the headwinds Circuit City is facing--Chief Financial Officer Bruce H. Besanko cited significant declines in traffic, heightened competition and a weakened brand position--the company said it was "prudent" to withdraw its previous outlook for fiscal 2009.

Many analysts on a conference call questioned Circuit City's relationship with vendors as it continues its multiyear turnaround heading into the holiday season.