CEO Phillip Schoonover continues to be devoid of any reality……you have to read this.
Circuit City (CC) says its loss widened in the first quarter because of a 11.3% drop in sales at established stores ads it is also suspending its dividend. The soon to be extinct retailer reported a loss of $164.8 million, or $1 per share, compared with a loss of $54.6 million, or 33 cents per share a year ago. Circuit City Stores Inc. says revenue fell 7% to $2.30 billion from $2.49 billion.
For the Q2, Circuit City (CC) expects a loss of $170 million to $185 million. Analysts expect a loss of $143.4 million.
Lousy, right? Not according to Schoonover..
“In the first quarter, we continued to see improvement in many of our operating performance measures,” said Philip J. Schoonover, chairman, president and chief executive officer of Circuit City Stores, Inc. “We are rebuilding our selling culture and focusing on creating a good first and last impression with the customer. We have seen improved trends in our store close rate and in our services and accessories attachments, and we are delivering a better customer experience in our stores as evidenced by the upward trends in our third-party mystery shop scores. In short, 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. I want to thank our associates for maintaining a sharp focus on expense controls, in order to build a more competitive cost structure, as well as for their hard work and dedication throughout the quarter.”
How about looking at some metrics that actually matter? Executive compensation? Sales collapsed, profits collapsed, margins fell, expenses as a percentage of sales rose, cash balances fell 74% to $94 million, accounts payable rose and debt rose 30%.
But wait, there is more:
“Crisp execution of our retail turnaround efforts remains our primary focus. The outcome of those efforts will position Circuit City well for the future and help us to capitalize on the anticipated improvement in the macroeconomic climate during the second half of the fiscal year,” concluded Schoonover.
Now, Phil, how about we just stop the collapse before we start talking about turning this thing around? Nothing good has happened in the three years you have been there.
If that was not enough, it would seem they are going to turn down the overture from Blockbuster (BBI). While I fell that it would be a disaster for Blockbuster, it would be the best thing for Circuit city holders as they will never see the price Blockbuster offered in this decade.
Said Schoonover, “As we previously announced, the board of directors is leading a process to explore strategic alternatives to enhance shareholder value, and that review continues. The board has not determined any course of action. As part of that process, today we filed a shelf registration statement with the Securities and Exchange Commission in order to give us greater flexibility to respond to strategic opportunities as they arise. Separately, during the quarter, we settled the potential proxy contest with Wattles Capital Management.”
What other choice could he possibly have? Nothing he has done in three years has worked. Just sell the damn things and give shareholder something….
The final slap in the face?
the company reaffirmed the following outlooks:
Fiscal 2009 Outlook
The company reaffirmed the following expectations for fiscal 2009:
— Consolidated net sales relatively unchanged from the prior year
— A mid-single digit domestic segment comparable store sales decline
Uh, any idea about little things like profits or losses? It kind of really does matter more than the other two above…
Jeez…one more
“For the second quarter, the company expects to record a loss from continuing operations before income taxes of $170 million to $185 million, compared with a loss of $128.2 million in the prior year second quarter. While the expected loss is larger than the prior year period, the year-over- year increase in the loss is significantly smaller than the increase in the first quarter loss.”
Translation? Q2 will suck also, just not as bad as Q1. I think they want a pat on the back for that.
Great job guys…
I am trying to come up with something funny to say but I cannot think of anything better than what is in this press release…
Disclosure (“none” means no position):None
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2 replies on “Circuit City…..going ….going…. Schoonover Inexplicably Still There”
I found your blog very interesting. You are talking here about Circuit City. I have found out everything about the company from http://www.pissedconsumer.com. Besides, I read consumer reports on the products and services of the company. I must say – very few positive reviews. Most people are not satisfied with the Circuit City, however it is one of the largest consumer electronics retailers in the United States.
You are dead on about this CEO. He is truly incompetent, and his outlook on the company’s performance is infuriating. As a shareholder I feel insulted the way he tries to paint a silver lining on a situation which has only gotten worse with every passing quarter. In December, he claimed that the company’s results were hindered by “self-induced” issues, and said he was “very dissapointed” with the company’s performance. This was followed by further false expectations of improved performance in the first few quarters of the year. It has been obvious that his turnaround plan has not been working, yet he is too stubborn to admit this and as a result spurned the bid from Blockbuster by refusing to open the company’s books. The fact is, that time after time, ever since the laying off of Circuit City’s most experienced sales staff, this CEO has blundered his job and my savings beyond what I ever though was possible. Today shares are trading at an embarassing $2.10 a share, down more than 80% from my initial investment. Honeslty, Schoonover couldn’t operate an Ipod let alone run an entire electronics company. What a sad, sad man, whom I hope to sue in the near future.