Wattles Ups Circuit City Stake; COO Named

RICHMOND, VA. — Circuit City's stock and senior management team both saw their share of movement this month as investor Mark Wattles amassed a 6.5 percent stake in the retailer, which hired a COO and lost a top sales exec.

Wattles, owner of Ultimate Electronics, now controls 11 million shares in Circuit City common stock, which he has been snapping up since November, according to a filing with the Securities and Exchange Commission. Wattles stated in the filing that the purchases were for investment purposes, but noted that he might use his shareholder position to influence or change Circuit City's management or board, or to gain control of the company outright.

Wattles was also an activist investor in Tweeter Home Entertainment Group. He prompted acquisition rumors in 2005 by accumulating 12.2 percent of the company's stock while urging its directors to drop poison-pill provisions blocking hostile takeovers. He sold off his holdings after Tweeter's board rebuffed his overtures.

Wattles acquired the Circuit City shares through his investment company, Wattles Capital Management (WCM), and a trust, HKW Trust, for which he is the sole constituent. WCM holds a majority interest in Ultimate Acquisition Partners (UAP), which owns Ultimate Electronics. Wattles formed the company in 2005 to buy back 32 Ultimate Electronics stores in a bankruptcy auction after taking the chain into Chapter 11 protection. He bankrolled the acquisitions through the sale of Hollywood Video, which he founded, and previously told TWICE that he planned to eventually expand Ultimate's store base, possibly through acquisition.

Meanwhile, Circuit City appointed John Harlow executive VP/COO and announced the departure of company veteran Danny Clark, who oversaw Circuit City's store, Web site and catalog sales operations as multichannel sales executive VP.

Harlow, a retail operations executive and former Deloitte consultant, replaces executive VP David Mathews, who ran the company's merchandising, services and marketing operations until he resigned last November for a job as president of a private equity firm.

Clark left after 25 years with Circuit City in the wake of disappointing December sales. Assuming his duties in part is Brian Bradley, who was named multichannel senior VP, with responsibility for Circuit's Web site and call center operations. He reports directly to CEO Phil Schoonover.

Responsibility for the company's retail stores goes to Harlow, along with the real estate, information technology and supply chain functions.

Reporting to Harlow is Kelly Breitenbecher, who leads the supply chain.

Mathews' merchandising duties were since assumed by John Kelly, who was promoted to chief merchandising officer in November.

Schoonover said the new appointments "enable us to move forward with our turnaround ... and accelerate our growth initiatives."

To help keep the management team in place, Circuit City's board recently approved a retention plan that will award executive VPs $1 million and senior VPs $600,000 over a three-year period.