Circuit City has taken itself off the auction block and will dramatically reduce new store openings following a $239 million net loss in its second fiscal quarter.
The company may also close existing stores following a comprehensive review of its business, intimated vice chairman James Marcum, who recently succeeded Phil Schoonover as acting CEO. Shorter term, the chain is preparing for the coming holiday season with "simple, easily implemented" fixes, he said during an investor conference call.
Domestic sales fell 10.6 percent to $2.2 billion during the quarter, ended Aug. 31, while same-store sales fell 14.4 percent and the net loss more than tripled from the $62.8 million loss reported during the year-ago period.
Circuit City's quarterly loss may be the reason why last week Bernard Sands, a credit reporting company, reportedly pulled its recommendations from the retailer for suppliers to ship it goods because it may not be able to pay vendors. The call could affect its ability to replenish inventory.
During the conference call, chief financial officer Bruce Besanko blamed the sales decline on the weak economy, a double-digit drop-off in traffic, new store openings by competitors and the diminished relevance of the Circuit City brand.
Given current market conditions, the company has abandoned plans to pursue a merger or sale, and instead is conducting "a comprehensive review of all aspects of our business," he said, while working to beef up four core areas: customer experience, execution, service culture and stores.
"We recognize that this will require that we intensify our efforts to correct problems in our business," Marcum noted, beginning with enhancing the in-store experience to help drive traffic, plans that have been in the works under Schoonover.
In addition, Jeff Stone, the former Tweeter CEO who runs the company's new format The City stores, has been put in charge of all retail operations in order to integrate successful elements from the prototypes across the entire chain.
John Kelly, chief merchandising officer, intimated that Circuit City was prepared to compete on price during the holidays, and would present "compelling offers to enhance traffic."
In a statement, Marcum said, "Heading into our most important selling season, we