- The Washington Times - Monday, December 26, 2005

Circuit City is making a comeback against rival retailers after revamping its sales strategy.

The Richmond company said its sales rose 14.7 percent in the third quarter ended Nov. 30 compared with a year earlier, while its online sales rose 74 percent.

“We’ve done a lot of work over the last year to turn around the business, and we think those efforts have started to bear some fruit,” said spokesman Bill Cimino.

Circuit City is retraining employees to improve customer service, redesigning stores to make them more user-friendly and relocating stores that perform poorly.

The company overhauled its merchandising to focus more on popular items such as high-definition televisions, digital cameras and MP3 players, Mr. Cimino said.

“Those products have been driving a lot of the sales growth this year,” he said.

Circuit City earned a profit of $10.1 million (6 cents per diluted share) on revenue of $2.9 billion in the third quarter. In the same period last year, Circuit City lost $5.9 million (3 cents) on revenue of $2.5 billion.

The company’s stock closed 5 cents higher Friday at $22.87 on the New York Stock Exchange. Stock markets were closed yesterday for the Christmas holiday.

The same day Circuit City reported its earnings last week, the company’s board of directors announced that W. Alan McCollough would retire Feb. 28 as chief executive officer.

He is being replaced by Philip J. Schoonover, the company’s president since February. Mr. Schoonover, who joined Circuit City in October 2004 as chief merchandising officer, played a big role in the company’s recent successes against competitors such as Wal-Mart and Best Buy.

Sales at Circuit City stores open at least one year rose 13.1 percent in the third quarter, compared with Best Buy’s 3.3 percent gain for the same period.

In Circuit City’s TV category, sales posted double-digit gains; sales of flat-panel televisions rose in the triple digits.

The price of a flat-panel television has been dropping by about 30 percent per year as production ramps up and technology improves. Over the past year, Circuit City has doubled its inventory of flat-panel televisions to about 80 per store.

However, analysts predict that the company will struggle to make the kinds of market inroads it has this year. Best Buy Inc. and Wal-Mart Stores Inc. are concentrating more heavily on the same kinds of merchandise Circuit City is selling.

Minneapolis-based Best Buy has struggled with higher costs associated with its effort to focus on its most profitable customers. Bank of America analyst David Strasser said Best Buy also had a “choppy” start to the fourth quarter.

“While [Best Buy] may look like the relative underperformer this quarter, we believe their strategies will prove more fruitful long term, especially as [Wal-Mart] gets aggressive,” Mr. Strasser said.

• This article is based in part on wire service reports.

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