Circuit City Posts Expected Loss, Adds High-End Brands

Circuit City store frontAs expected, beleaguered Circuit City Stores posted a loss for the latest quarter, and a big one: $164.8 million, compared to a loss of $54.6 million in the same period a year ago. And sales fell 7.4% to $2.3 billion, from $2.49 billion, with consolidated comparable store sales decreasing 11.3%.

Still, the company claims it is seeing improvements as a result of changes made over the last several quarters, and that it's on target to meet its financial goals for the year. Separately, the company announced that in August it will begin selling products under the Klipsch and Energy brands in all of its 700 stores, as well as online.

"We are rebuilding our selling culture and focusing on creating a good first and last impression with the customer," the company says in its release. "We are delivering a better customer experience in our stores as evidenced by the upward trends in our third-party mystery shop scores. The quarter represented improved execution and solid, steady progress towards our goals, and we expect to start to see year-over-year improvements in our financial results beginning in the second half of the year."



The company is continuing its search for "strategic alternatives to enhance shareholder value," and says that it has filed with the Securities and Exchange Commission to "give us greater flexibility to respond to strategic opportunities as they arise."

Domestic sales were especially weak, falling 8.8% to $2.17 billion, with comparable-stores sales dropping 12.2% for the quarter. Web sales managed a 3% gain. Video sales experienced a double-digit loss, as did TVs overall, while flat-panel TVs gained. Comparable-store sales of digital imaging products and accessories and camcorders fell by double digits, and sales of computers--both desktop and notebooks--also declined. GPS sales gained a bit.

Some of the biggest declines happened in Circuit City's Firedog PC services and home theater installation division, where revenues dropped 16%, to $64.4 million.

But the company reaffirmed its earlier projections that sales declines would come in overall in the mid-single digits--and that despite a continued weaker economic environment, it expects sales to gain in LCD televisions, notebook computers and video gaming products, with continued declines in projection and tube televisions, desktop computers and portable audio products.

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