Anyone remember when their idiot CEO decided that their salespeople were paid too much? It was just obvious right there and then that the company is finished. The saddest part about it is that this CEO walks away with a severance package while the shareholders & employees get screwed.
I was the OP of this thread. Circuit City is the 5th most visited site for retail in the world. They won't need massive brick and mortar stores to fulfill their goal of creating a more profitable business model in the only segment of retail that I love at the current time - electronics. They had a private equity offer of $20/share several months back. I was short this company when it was at $19. I have a feeling this company gets bought out at the $10 to $15 range, and that fair market value for these shares rises to $12+ within the next 12 months assuming they even come close to meeting analysts' expectations. I'm long, and hopefully (for me) I'm right. I'm long very few turnaround stories, but this is one I love, in a retail segment (electronics) that I love. Think online ordering of HDTVs and Blackberries, Wiis, Xboxs and iPhones, and everything digital, with the advantage of being able to pick it up within 24 minutes, rather than waiting for Amazon to ship it within a week or longer. It's a business model to get behind. Think of Circuit City as transitioning to a more Amazon-like model, with shorter purchase delivery times, and a better distribution channel. Time will tell.
I can buy that $500 gadget on amazon with no sales tax whereas circuit city is going to charge me 8.75% or around $45 extra for sales tax. With the savings you can get 1 day express shipping if you'd like, but the regular free shipping is pretty fast (I usually get crap in 2 days). The best internet retailers are those that don't charge sales tax because they only have a presense in one state. A big up and coming electronics retailer is newegg.com. They only charge sales tax if you live in CA. I don't circuit city has any edge online; Being forced to charge sales tax when your competitors don't is big disadvantage. Dell started having problem when they cut a deal with some of the states to charge sales tax on computer purchases. After that, more people didn't bother with Dell and just went to Best Buy / local retailer to buy their computer.
Circuit City is not Tweeter. CC has over 700 stores. And they have some prime locations. Tweeter never had a sophisticated internet (5th most visited) site. And sales tax is no big deal. Time will tell.
They need new mgmt, close all nonperforming stores... and incentives for employees... stock will be back to $20.. if this happens. Company does over $10bil in sales a year.. there must be a way for them stop losing money. They have a ton of cash on very little debt. New mgmt team will figure out how to turn this company around.. create positive cash flow and pay div. to shareholders. Right now as shareholder.. first thing needed to be done is fire ceo.
Right, I agree. But look at it this way - Circuit City does NOT have a revenue problem. They sold 12 billion worth of inventory last year. They have a cost problem. If you had to pick two companies to bet on given a turnaround play, what would you pick? A company with a revenue (lack thereof) problem? Or a company with a cost control problem? You can remedy costs much easier than you can remedy a lack of revenue. Circuit City does not have a revenue problem.