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Circuit City Sales Fall 9% In Dec.

1/07/2008 08:14:00 PM Eastern

RICHMOND, VA. — Circuit City’s December sales slipped 8.9 percent to $1.9 billion and same-store sales fell 11.4 percent due to disruptions from ongoing turnaround efforts, the company reported Monday.

Total sales at domestic stores decreased 10 percent to $1.8 billion while U.S. comp-store sales fell 12.2 percent year-over-year. Domestic direct channel sales, including Web- and call center-originated sales, grew 17 percent, and PC services and home theater installation revenues grew 15 percent. Domestic extended warranty net sales fell from $52 million to $36.1 million year-over-year.

In a statement, CEO Phil Schoonover said the results were disappointing but in line with projections, and that significant sales gains over the last half of the month were insufficient to offset year-over-year declines during the prior two weeks.

“Our efforts to turn around the business have led to greater disruption than we anticipated,” he said, “but we continue to believe that we are on the right path to return to sustainable, profitable growth and increasing shareholder value.”

Schoonover said the chain is taking the following actions to improve performance:

·       intensifying attention to fixing its close rate and attachments by empowering sales associates with the necessary knowledge and tools needed to improve both sales and margin;

·       fixing its gross margin rate through merchandising, marketing and pricing discipline;

·       fixing its expenses by achieving targeted expense reductions for next year and further aligning its “workstreams” with strategic goals; and

·       growing the business by expanding sales of its Firedog services and its direct-channel businesses as well as relocating, remodeling and successfully opening new stores.

On the product front, comp sales of flat-panel TVs were up by the high single digits although total TV comps fell by the low double digits due to significant declines in rear-projection and direct-view sales. Camcorder and DVD hardware comps decreased by double digits, and comp sales of digital imaging products and accessories decreased by the high single digits.

In IT, sales of notebook computers increased by a low single-digit rate and comp-store sales of desktop computers declined by double digits.

Audio comps decline by the double digits while navigation comps increased by strong double digits. Portable digital audio, digital satellite radio, home audio and mobile products all declined by double digits.