Is the Circuit City deathwatch on? - Top Stocks Blog - MSN Money
 
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Is the Circuit City deathwatch on?

Posted Apr 09 2008, 02:08 PM by Kim Peterson
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Walk into the Circuit City in my town, and you'll suddenly get a strange sensation. Look around...you're the only person there. Wait, someone must work here. Hello? Anyone? Then head over to Best Buy, which is packed with customers and ringing up sales.

Why is Circuit City struggling while Best Buy shines? There are many reasons: prices, marketing and sales strategy top the list. Look at the stock prices of the two: Circuit City shares have fallen from nearly $19 a year ago to $4.30 today, while Best Buy shares have stayed in the $40 to $50 range all year.

Circuit City might see some big changes soon. BusinessWeek reports that the retailer may have hired Goldman Sachs to look into sale possibilities. This comes after the company's turnaround plan has failed. Analysts say one of the worst decisions executives made was to fire 3,400 of the most experienced workers and replace them with lower-paid ones, according to Business Week. Customer service went out the window.

There is some good news. After a money-losing streak that lasted several quarters, Circuit City's cost-cutting has put it back in the black. The company made $4.85 million in the quarter ended Feb. 29. Yet that profit wasn't due to a sales boom: same-store revenue fell 10.4%, while overall revenue fell 8% to $3.65 billion. Best Buy same-store sales fell just 0.2% in the fourth quarter.

Today, Circuit City said it faces the "toughest macroeconomic environment in years." A Sanford Bernstein analyst said the company's outlook is weak due to sluggish store sales and margin erosion.

What can be done to save Circuit City? One of its most vocal shareholders wants to replace all 12 members of the board and sell the company. CEO Philip Schoonover is pushing ahead with a turnaround plan that includes improving what he calls the "selling culture," cutting prices on warranties and unveiling smaller concept stores called "The City."

These are tough times for any retailer, and Circuit City is smart to be exploring a sale. But in this economy, and with a huge rival like Best Buy, can anything be done to save this company? 

Further reading:

Why Circuit City must be sold now

The Why of Best Buy

Circuit City and profits: still more questions than answers 

Circuit City Q4 earnings call transcript 

Comments

 

Poor customer service to blame as always. Ordered a $21 memory card online for in store pick up, cancelled my order, and THE STORE insisted I had picked it up. All this over a $21 item I never picked up. Would I buy a $2000 TV from a company like this, NOT ANYMORE. GOOD RIDDANCE to a company that has forgotten where it came from!

Their customer service is not good.  I have a huge warranty issue for 3 months now on a big screen and have been told that I cannot speak to a manager and that I have reached the "highest level of customer contact."  With employees having that attitude and inability to make things right, I will never shop there again.

In all actuality, Best Buy is not much better. Add to the mix HH Gregg. Another example of big box retailers who place sales over serving the customer. Twenty years of B2B sales experience taught me that when you take care of the customer, the sales grow and grow (repeat and referral business). Nordstrom has always been a shining example of a retailer whose primary focus has always been customer service. Their profits may have peaks and valleys, but in the long term they are solid performers. Of course some Nordstrom employees may disagree, but the people I know have made fine careers there with solid income growth. Going back to basics and providing first class customer service is the key to success.

I avoid Circuit City.  I purchased a lot of products from them in the past and then had a VERY POOR customer service experience with a TV they delivered to our home that was broken.  The defect (which couldn't be immediately detected) was discovered very soon that same day and when we contacted them they were like 'sorry, its your problem now and you're out the $1800!  (although they picked up the TV how about that) Fast forward through numerous calls and headaches later and after receiving a 'help rejection letter', I finally got smart to them, talked to some guy at their delivery service, and ended up calling a guy at one of there corporate offices who actually processed a refund for me (even though their complain review dept rejected me!).  Oh well, they owed me the money anyway.  Not my problem if their right hand doesn't know what the left hand is doing.  Kicker to this was the guy couldn't process the whole refund - he shorted me about $100 for cables that were returned (employees took them) and I ended up paying for the original delivery charge too.  Sorry company policy.  My response in silence : - oh yeah, f--- you, I'm never setting foot in your stores again!  It looks like a lot of other folks have the same idea.  I hope Circuit City mgmt reads this and realizes how far their company has fallen.  The runaround I went through with your company was completely ridiculous.  If you can't make a buck without screwing your customers or providing shitty service then sell the business and return what little value you haven't already destroyed back to the shareholders.  Then please don't come and try to get a job working with me.  Oh and btw I made a boatload of money shorting the sh-- out of your stock!

I stopped shopping Circuit City because ofd the high pressure sales people.

I have always received the WORST customer service at Circuit City and the sales people are rude, unfriendly and not helpful at all.  The manager at the local CC in Longview, TX is a total jerk.

Here is my issue that I had contacted C.C. Corp. about and check out their response:

MY EMAIL:  

Dear Circuit City,

I want to let you know of my recent experience of trying to buy a new computer monitor.

I have been checking different places online and had seen a LG monitor (L204WT) on your website and decided that this was the best deal. So, I ventured to your store at Quail Springs (13730 North Pennsylvania Avenue, Oklahoma City, OK 73134) on Thursday (1-31) afternoon around 5 pm. There was not one on display so I asked for help. They were locked up underneath and not one on display. The two young male salesmen came up and I asked about it. They said that LG was not a good brand and I should buy something else. I said thank you and left. So, Friday (2-1) I took my lunch hour to try again. I went to Crossroads (1409 W I 240 Service Road, Oklahoma City, OK 73159) and once again, there was not one on display. I asked, this time the salesman had no idea of what monitor I was asking about BUT he did look it up on the computer and saw that they should have some. We went back over to the monitors and found them up on the shelf. I asked him about the reliability of the LG brand and he said they were good and should have no problems. I stated that I came in to take a look at them. Once again, I stood their and looked at him and there was no response. I said thank you and left.

Why am I writing you about this? I was discouraged from buying an item in your store by your employees. At a different store, I stated that I came into the store to look at an item and was not shown one.

I am not going to tell you how good of a customer I am or that I spend a ton of money in your stores, because that would be a lie. I came to your store for the best deal on a good product. Let’s be honest, most people shop so they can get the most for their dollar. You were the best deal.

I am sorry that your employees were not more helpful.

V**** P*****

THEIR RESPONSE:

Dear V**** P*****:

Thank you for contacting circuitcity.com. I apologize for any concerns you may have regarding your recent Circuit City customer service experiences.

We value our customers’ feedback and appreciate your comments. Our goal is to provide the best customer service possible, and we regret that in this case, we fell short of your expectations. We work with our management to ensure that all shortcomings are addressed.  

If you have further questions, feel free to contact us at 1-800-843-2489. Thank you for your interest in Circuit City.

Sincerely,

Customer Support Coordinator

I've recently purchased a notebook computer from Circuit City and I have to say that I was very impressed w/ the service and attendance that I recieved from three locations in SoCal. I mention three locations because I was very aggresive in making sure that I was getting the right deal for the product that I was looking for and the other places that I shopped were within the vicinity of the aforementioned locations. In the end, I chose CC because the price of the purchase item was right, the people who helped me out were very knowledgeable w/o being pushy and they offered a great incentive. Trifecta! It did surprise me to see that all of the locations were well capacitated w/ customers after reading some of the gloom and doom about CC lately. They definately were not ghost towns. I hope the best for them and their employees.

The reason Circuit City is in the red is because of one reason only......service. A few weeks ago, I bought some outdooor speakers for my deck. A debate ensued regarding my personal information. I vowed I would not return to Circuit City to shop and the manager said," fine who cares." If you try to speak to a corporate office or a district manager...forget it. You are outsourced to some poor person in the Phillipines who is reading a scripted response. The store is in Altamonte Springs Florida and "who cares" indeed....

Why are their so many Managers at Circuit City?? I see all the Managers off in the corner just shoot the you-know-what not doing anything EVERYTIME I walk into a CC. I walk into a Best Buy and I get gang rushed by sales people asking me if I need anything.... it was actually nice to see after walking through a CC. Most of the stuff CC says is available for pick-up at their stores is never out on the display floor! I have to go an get the product number...why do I have to go do it?? The person has to go on the internet to CC's website to look up the product number?! Their LCD and Plasma TV's are outdated and have dust all over them. Best Buy has walls 20ft high covered in LCD and Plasma Tvs. CC's are dark and VERY cramp... their customer service desk is an afterthought.. I don't see CC being around for Chirstmas '08....

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