Circuit City reported yesterday that they’ve managed to lose $164.8 million in the first quarter, which is even more money than they managed to lose in the previous disastrous quarter. In fact, this will be their 5th straight losing quarter. Same-store sales, considered the most important indicator of the health of a retailer, dropped 11.3 percent. Ow!
“This is a quarter of steady progress,” CEO Philip J. Schoonover said in a conference call with investors. “We still have a long way to go, but I’m encouraged by what we’ve been able to accomplish.”
Accomplish? Does anyone want to tell Phil that he’s supposed to be selling electronics? No. That would be cruel.
Meanwhile, there’s been no word on Blockbuster’s plan to buy the troubled retailer. Presumably, they’re still thinking it over.
Circuit City loss increases; next quarter may be worse [Star-Tribune]
Circuit City Posts a Wider Loss as Sales Fall [NYT]
(Photo: cmorran123 )
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I tried to buy a M-rated game that was on clearance the other day, and for the first time ever, I was asked for ID. I refused, of course, given the privacy implications and the overall rudeness of asking a grown adult for ID over a stupid game. They even tried to lie to me and tell me it was “federal law” and not just a store policy they apparently only enforce when they decide they don’t like the look of you and want to embarrass you.
My point is… they seem to miss the fact you can often just go across the street to the Worst Buy or wherever and get the same thing price matched and not deal with their bologna. So, I’m not really surprised they’re circling the toilet bowl.
Circuit City does have some issues. Fiscal year 2007, the average company gross margin was merely 18%. That’s with those fancy services and everything. It’s basically TVs that make or break the store. If the technology department (imaging and computers) makes budget, then it doesn’t really affect the overall store like TVs does.
Computer gross margins are so horrible. They’re usually anywhere from -25% to 15%. Almost any laptop you see in the ad, Circuit City loses money on. THAT is why they push firedog, warranties, and so forth on you. Don’t get offended when they’re offered unless the person is an obvious idiot; I’ve heard other associates say stupid stuff like “you cannot create recovery discs on your own, only we can for $29.99″.
The big internal push for the company, once again, is firedog and TVs. Both products have high gross margins and are big-ticket items. In fact, Circuit City is now testing commission based sales in their TV department only. Apparently, if your gross margin per hour is high enough, you’ll gain incentive bonuses. So not only will it require the employees to learn about the product to better help the customers, they’ll actually WANT to help you! Shocking!
I think another problem is the expectations corporate has of it’s lowly-paid, lowly-motivated employees. In the internal training, it mentions how to overcome certain objections to warranties and so forth. For example, the associate is supposed to say something like this if you reject the warranty: “So, is it that you do not see the benefit and value of the warranty, or is it simply too much money? Well sir, if it’s too much money, we do offer our credit card with 12 months of no interest right now!”. What 20 year old kid making $8 hour is really going to do this every sale? I can tell you from my store and my own experience, not very many. But Circuit City expects this. It’s ridiculous.
Lastly, and my apologies for writing so much, is the common joke among employees at Circuit City is this: “Only work hard enough to not get fired, but don’t work too hard or you might get laid off” So sad.
ohhh, I can’t wait enough to see CC going down like CompUSA
I’m not surprised that CC is losing money. I go in there every once in a while, maybe every six months or so, when they have a good sale on a very specific product I’m looking for. In the last three or four years, everytime I go in my local CC, its a ghost-town. It’s a pretty big store, but there’s always maybe two people inside. The staff is always standing around talking to each other, bored as hell because they have nothing to do and no customers to sell stuff to. In all the times I’ve been in there in the past four years or so, I seriously doubt if I’ve EVER seen more than five customers in the store at once. And again I must stress, this is a large CC. I can’t even tell you how many times I’ve wondered how the hell they stay in business as long as they have. There’s no possible way that they’re turning a profit.
I got a CC gift card 3 years ago, and I STILL haven’t used it. Whenever I have an electronic item I need to buy, I go to CC, BB, and Fry’s (all in a cluster sorta near my house). BB (I’ve never had a problem with them, I’m NOT calling them Worst Buy) and Fry’s ALWAYS, ALWAYS have better prices and service than CC. It shows – the Fry’s is always full, the BB is usually at least half full, and the CC is always echoingly empty. I don’t know how they stay in business.
I better use that gift card before they go into bankruptcy and stop honoring their obligations, the way Sharper Image did! I’ll pick up some DVDS or CDs or something…
I’d mourn the loss of CC only b/c it would cut down on competition for BB, and they’d probably get worse. CompUSA’s gone, so what’s really left in terms of brick-and-mortar? (Like many here, I like to see what I’m buying first).
Oh, and when I had to replace my dinosaur laptop in a hurry after it died, I went to all 3. I was looking for a smaller (13 inches), under $1000. BB and Fry’s both had good deals, but the CC only had one, well over $1000. (And all their laptops were more expensive in general…)
And when I asked the CC guy if this was all there was, he FLAT OUT LIED to me. He told me that “manufacturers don’t make cheaper small laptops.” Unfortunately for him, I’d just been to BB and Fry’s, where the same manufacturers were apparently making smaller yet not too expensive laptops.
I haven’t been back since.
I would miss CC because it’s my secret weapon for finding sought-after video games on release day without a pre-order. I’ve twice gone to the customer service desk and they were able to provide games that were sold out or not yet stocked elsewhere.
Couldn’t happen to a nice bunch of scumbags. Retail moron NEVER learn (can’t, no brains) that poor customer service, lousy prices, and retail games do NOT add up to a successful retail business. That’s why only morons work in retail. NO BRAINS. The only thing dumber than a retail employee is the management, they’re lifers. The only thing dumber than the management, is the corporate ownership.
they,cc,used to be a decent place to shop…i have had good experiences with them….then it seem like the outfit did a 180 degree and turned lousy…..the help doesn’t seem to know even where the restrooms are….they don’t seem to know what they are selling….you have a better chance of getting knowledgeable assistance from wal-mart staff then from those at cc…..it’s a shame…..as far as bb goes, i don’t even enter their store……i guess it’ll be on line for me from now on…..
I must be the only person around who actually likes Circuit City. Their store where I shop is clean, the employees are friendly without being overly pushy, and the selection is pretty good. The prices on their clearance/demo products are usually very good (beating online most of the time) and I’ve bought quite a few open box products there before. Never had any issues with returns either. Given the choice between Circuit City and Best Buy, CC is a no brainer for me. It’s one of the few retail stores I still don’t mind going into.
Best Buy is not going anywhere. Circuit City may as well be dead. Pull the plug already, stop letting the company SUFFER!! Stock is declining, staffing is under par by the assloads, and merchandise is as rare as my favorite steak! (Pardon all the bad puns there, but hey…this is exciting!)
You people need to understand that, yes, you can almost always get a better deal online than in an actual store. But you don’t get the customer experience! Don’t lump your bad experience at one store in with the rest of the B&M stores. If you went into a Best Buy and had a bad experience, or Circuit City, or Wal-Mart, or wherever, those are mainly singular events. Seclusive and definitely not a company value. You can buy everything online these days, but you you cannot replace a sight with your own eyes with a thumbnail picture on a website. True, people may go into a Best Buy to see what TV they want, and then order it online. That’s fine. But the gas you wasted to go to that store, possibly having to put up with so-called “dumb employees”, and shipping charges you’re going to have to pay ANYWAYS, all pale in comparison to the convenience to going to a store, saying “I want that one”, and walking out without paying to have it shipped, without waiting a week for it when you want it NOW, and even with the service plans (or as some people say “extended warranties” which is a totally FALSE statement that I’ll get into some other time) those are freakin’ OPTIONAL. A simple “No” or two is all that is required and you’re on your way.
So, don’t judge a store by a bad personal experience, and CERTAINLY don’t judge it by a total stranger’s experience!
“Do you want to know why they are losing money? It very simple. It’s called price, and they are outragous there. I went into CC on Wed because I needed an internal DVD/RW. My rule is if it’s within 7% of an online store, I’ll buy local and support my local community. They wanted $120 for a basic DVD/RW (no lightscribe) that Newegg had for $30.00, plus $6 S&H. I decided to wait and order it online instead. It’s really a shame that I couldn’t buy it from the new CC down the street.” by all4jcvette
Yeah, that’s a lie. We have NO drive in my store or on the website that fits that description. Between fifty and sixty is what they usually cost, more for the Sony, of course. They all still fall outside of your asinine and unusually specific 7% guideline.
@ColoradoShark:
Most people actually don’t understand the 24 24 guarantee. They actually only shell out maybe 1 a week. Read the details of it.
@all4jcvette:
Oh no my good sir.. it is not price that is killing them. They will match most nearby stores silly.
@javi0084:
You sir.. are correct.. we have a winner here. They did, and continue to fire employees, to replace them with ones who can be paid less. Thing with this is that the reason these employees are paid so much, is because they have been working there’s a while. So, they are more knowledgeable. Its simple logic really… You keep people who know what they are talking about. CCITY hasn’t figured that out yet. EVERY employee knows after their first raise.. their time is coming soon.
BUT heres their main flaw… This is where Best Buy beats them out in smarts. The smart business thing to do would be to follow them. Best buy actually only pays for items when they leave the store (as do most retailers). While Circuit city works on credit. They buy everything, then when it sells they make back the money. The main problem with this, is that they deal with technology.So the more time something sits… the less its worth… the more money they lose….
SO ccity gl..
cant wait to see who buys them out.
Actually it would be a smart move for anyone who did buy them out considering they actually own everything in their stores.
i work at ccity, but im gonna be honest. there are ALOT of problems with the company in the upper section mainly. It starts with Phil, who we all have a local store bet as to how long before he gets kicked out. I don’t know about or care about any other part of the store except my area in tvs, so im glad the did away with the ” full floor” aspect. That was the reason so many people got unknowledgable sales associates.. I wouldnt know the difference of ddr and ddr2 memory if my life depended on it, but on thursdays it would be 2 associates in tvs, me and another associate closing computers, and another tv assciate closing mobile.. since they changed that it has been much less stressful and we are able to focus more on our home area.
to respond real quick to the poster a few posts up, we HAVE to id you. it is our job. I am 24 and i know what a person 18 or older looks like, but i have no choice.. I had to id my neighbor when she paid for her new tv with a credit card. ive carded parents buying a grand theft auto 4 that looked older than my mothe at 55. If you want to bitch about it, go ahead, but i defend the decision. its the same in every retail store in america, but they just chose not to do it. its like buyig cigarettes.
also, there are no registers open because we dont get enough hours to fully staff the store unless its a holiday or big sales event or something. that leads to every customer not getting the attention they deserve, which half the time i spend is with people who come in a refuse to buy anything at all and waste my time asking every question under the sun and then turn around and leave without a thank you or some kind of gratitude for making his purchase on amazon/newegg/crutchfield easier and showing him the value in the hdmi cable, whether he buys a 40/130 dollar one from us or a 5 dollar one online, so he knows the value..but im off topic..customers not getting attention leave, thus costing us money and thus losing us hours. although i know my shit and i get 30 hours a week as a p/t associate. but its not cuz im the best salesman, cuz im not.. its cuz i give a shit about the job, want to make the company money, and make a differnce to some customer..but thats just my opinion..but it sounds like the current employees that are on here hate their job, so my adive would be to just quit. make all our lives better. thanks for listening