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Quick Hits: Circuit City Gets Routed


Brief scrutiny of today's headlines.

Circuit City Stores (CC) reported a wider-than-expected second-quarter loss and withdrew its financial forecast for the year.

The electronics retailer reported a loss of $239.2 million, or $1.45 a share, compared with a loss of $62.8 million, or $0.38, a year ago. Without non-cash asset impairment charges, the loss totaled $1 a share. Analysts expected a loss of $1.04.

Sales fell about 10% to $2.39 billion as lower US sales undercut an increase in international sales. Analysts expected companywide sales to total $2.5 billion.

Same-store sales, or sales at stores open at least a year, declined 13.3%. Sales in TVs, video games and computers also fell.

Bruce H. Besanko, Circuit City's Executive Vice President and CFO, said:

"Our sales were below plan for the quarter, driven by a significant decline in traffic, which we believe reflects the worsened macroeconomic environment, competitive pressures and a weakened brand position...While we have continued to gain traction in key areas, such as improving the close rate trend, rebuilding our selling culture and delivering a better customer experience in our stores, the progress we have made to date has not been sufficient to reverse our overall business results."
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Circuit City said it plans to halt new store openings starting with its fiscal year 2010 and will focus on boosting sales. The company faces intense competition from Wal-Mart (WMT) and Best Buy (BBY).

Last week, Circuit City announced the immediate departure of Chairman and CEO Philip Schoonover. The company named James Marcum acting CEO.

In June, Circuit City said it expected sales to be relatively unchanged from last year and looked for earnings to increase one-half, to 1%. The company withdrew the outlook after reporting its second-quarter results.

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