I’ve been following Circuit City ever since I read that they fired 3400 of their highest paid workers and brought in a bunch of “new hires” at a lower pay rate. At this point, I would say that their strategy is failing. Go figure. Get rid of your best people and your sales miss your forecasts. It’s amazing to me that they really believed getting rid of their top performers and replacing them with a bunch of newbies would really help their bottom line. I would have predicted a little bit more subtle drop in sales but this article makes it sound like they are scrambling now.
Circuit City’s stock is now at a new 52 week low. Obviously there are other factors at play to explain their continued weak business, but certainly they aren’t a very attractive stock right now. I’m all for buying a company’s stock when it’s in the tank but Circuit City feels a little extra risky. I’m not exactly thrilled with their management approach. It should be interesting to see what their numbers look like over the next few quarters. I think they are going to lose a lot of market share to Best Buy permanently. Maybe I should go look at Best Buy as a stock to own.
http://hosted.ap.org/dynamic/stories/C/CIRCUIT_CITY_OUTLOOK