Some of these are priceless, when I get into this I feel like I am in a Corporate version of “Spinal Tap”. I think Schoonover actually believes himself…
“I am very pleased to report to you that our first quarter results were above our guidance and the company is on track to deliver its financial guidance for the year. Fiscal year 2009 will be a year of very hard work and focus on execution, but we expect to improve our financial performance compared with fiscal year 2008 and set the stage to return to sustainable profitability in the future.” said Schoonover leading off the latest earnings call.
OK, but wasn’t Q1 already considerably worse than last year and did we expect Q2 to be worse that last year? Answer? It was and Q2 will be. Just how good does Schoonover expect Q’s 3 and 4 to be?
“We saw improvement in trends in nearly every category. The work is progressing well and we must maintain our focus in order to produce year-over-year improvement in our financial results.”
True, except for sales, profits, margins, debt and cash. They were all worse.
COO John Harlow said:
“We measure customer satisfaction in two ways; one, through third-party mystery shops; and second, through customer first scores. We saw another 250 basis point improvement in mystery shop scores from March to May, on top of a 600 basis point improvement we saw from when we started measuring in July to March.”
You could measure them in repeat sales? After a larger drop (12.2%) than any other electronics retailer last quarter, people are just not shopping there.
Back to Schoonover:
“We still have a long way to go but I am encouraged by what we’ve been able to accomplish in the quarter. In short, we are building a new Circuit City that will be much stronger when economic headwinds subside. Bill.”
Now, he has been there for three for three years now and results have deteriorated even when the were not only no “economic headwinds” but “tailwinds”. That gives us no reason to expect anything different when the do “subside” which, by the way, may be another year or so.
Why will the 2nd half of this year be better than last?
Schoonover: “Just one last thing — on a go-forward basis, as I think you’ve seen, the first quarter is certainly the most difficult quarter on the two-year comps for us and so as we go through the year, the ability to sustain and build versus an area where we had slipped last year, we see that as being another level of our ability to deliver for Q2 and beyond.”
So, it will not be due to a resurgence of the business but “easier comps”. Way to go boys…
Here is a great exchange:
Michael Lasser – Lehman Brothers
“It sounds like a lot of the focus has been on the in-store experience and you are pleased with some of the gains that you’ve made there with improving the close rate and the like. Can you talk a bit more about what you are doing to improve traffic and the draw rate? Because perhaps some of the improvements that you are witnessing are due to the declines in traffic and you are losing, you are moving closer to a core group of customers and as you lose out on some of those folks that have a lower propensity to purchase, that would cause the close rate to increase. So perhaps you could talk a little bit about the traffic.”
John J. Kelly:CMO
“Some of the things that we are doing to improve traffic in addition, we obviously had been using our movies and music departments to drive traffic. Now we’ve moved into some of the more commodity type of products, such as Flash media and other types of media, product-centric and PC accessories to drive traffic. You are seeing demand for that type of product as prices come down and it begins to [commodicize] the ability for us to use those products as traffic drivers, and use them out in front, the front covers and back covers of our task to drive people into the building to purchase these products, and we can use that to offset what we see as a decline in music and movies.”
John T. Harlow: COO
“I think our plans and strategies this year focus on close rate and basket attach, and we expect in a tougher economy with declining industry trends in packaged media to actually see less traffic.
We mentioned a couple of times that our first quarter was our toughest comp. It was also our toughest traffic comp for the year last year, and we have aggressive promotional calendars throughout the year around all the holiday drive times, beginning with back-to-school later this summer.
But bottom line here is most of the changes we’ve made are in the home entertainment side of our store. That’s roughly half of our company’s revenue and more than half the company’s profit. We are focused on optimizing those customers from a revenue standpoint and from a profit standpoint.”
OK, but can you answer the question now? Are the “customer service” gains constantly mentioned simply due to the fact that those being quantified are those that are “the choir” and love the store? Are they the only ones left to judge now that the median buyer has left for Best Buy (BBY)?
Were are still waiting for the answer boys…
You know what this reminded me off? The Captain of the Titanic walking around marveling at the newly painted dining room of the ship while it slowly sinks.
Disclosure (“none” means no position):None
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