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Circuit City Shrinks In Bid to Save Cash
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"Clearly these store closings are just the beginning," she wrote.
The closings are the latest turbulence at the nation's second-largest electronics retailer. Last month, the New York Stock Exchange warned the company that it was in danger of being delisted because its closing stock price averaged less than $1 over a 30-day trading period. Its second-quarter losses ballooned to nearly $240 million while cash flow dropped to less than $100 million. Last fiscal year, Circuit City lost $320 million, its worst performance ever.
The company last reported a quarterly profit during the first quarter of last fiscal year and an annual profit in fiscal 2006.
"The weak consumer spending environment and deceleration in key product categories make it unlikely that Circuit City will be able to return to profitability in the near future," Pacific Crest Securities analyst Andy Hargreaves wrote in a recent note.
Earlier this year, activist investor Mark Wattles sparked a proxy battle when he called for the removal of then-chief executive Philip J. Schoonover and the sale of the company. In April, Blockbuster made an unsolicited bid for the retailer but pulled out a few months later as the economy continued to curdle. Marcum was appointed in September to lead the company.
Marcum said yesterday that the company was considering "all available options and alternatives" as it attempts to turn around the business. Circuit City also plans to e-mail a letter to customers explaining its decision and holding out hope for the future.
"We will now be better positioned to focus our resources on a smaller number of stores so that we can ensure better overall service during this holiday shopping season and beyond," the letter says. "Our continued promise is to put you first."
Circuit City stock rose 10 cents yesterday, or 38 percent, to close at 36 cents.
