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On 2-25-05, Circuit City's (CC) board of directors has rejected the takeover offer of $17 a share by an investor, Highfields Capital Management. The specialty retailer prefers to stay on its current course of repositioning its strategy and operations. The board also doubled the stock buyback authorization to $800 million, of which $455.7 million remained as of the end of February. The stock only fell slightly upon the news. However the possibility of a sweetened bid cannot be ruled out.
Circuit City Stores, Inc. is a retailer of video & audio equipment, other consumer electronics & office products, including computers, software, & accessories, throughout the U.S. Stores include 625 audio, electronics, & computer stores & 5 mall-based stores in U.S. Discontinued appliance sales 7/00. Spun off its 64% interest in CarMax to shareholders 10/02. Acquired InterTAN 5/04 (1,026 stores in Canada). Has 5,800 stockholders, 46,100 employees.
Circuit City's same-store sales performance has turned disappointing. After declining 4.3% in the third quarter, they fell 5.8% in the key month of December. A lower volume of store traffic and heavy promotional activity were responsible for the disappointing showing. Although Circuit City has made numerous moves to turn things around (see below), fixing these problems could take a while.
Circuit City is continuing to add and relocate stores. By the end of fiscal 2004, the retailer will probably have opened 31 stores and relocated 29 more. In fiscal 2005, the company plans to build 30-40 stores, about evenly split between new sites and relocations. The expenses associated with the relocations (and one remodeling) will be an estimated $41 million in fiscal 2004 and $28 million in fiscal 2005. New and relocated stores are generally performing better than the rest of the chain, but these units make up a less than a third of the store base.
Will the retailer's upgrades bear fruit? Within the past several months, Circuit City has improved its Web site, gotten new merchandise into its stores (thanks to its acquisition of InterTAN last May), changed its advertising campaign, begun a rewards program for shoppers, set up an agreement that allows Verizon Wireless to operate a department within Circuit City's stores, and hired a chief merchandising officer. It is too early to evaluate the success of these steps, but they will begin to have a positive impact soon.
The company's stock-repurchasing program is ongoing. Circuit City is authorized to buy back up to $400 million of its stock. As of the end of the third quarter, it had bought back 24.8 million shares for $294.4 million. company will complete the repurchases in fiscal 2005.
Circuit City Stores, Inc. is a retailer of video & audio equipment, other consumer electronics & office products, including computers, software, & accessories, throughout the U.S. Stores include 625 audio, electronics, & computer stores & 5 mall-based stores in U.S. Discontinued appliance sales 7/00. Spun off its 64% interest in CarMax to shareholders 10/02. Acquired InterTAN 5/04 (1,026 stores in Canada). Has 5,800 stockholders, 46,100 employees.
Circuit City's same-store sales performance has turned disappointing. After declining 4.3% in the third quarter, they fell 5.8% in the key month of December. A lower volume of store traffic and heavy promotional activity were responsible for the disappointing showing. Although Circuit City has made numerous moves to turn things around (see below), fixing these problems could take a while.
Circuit City is continuing to add and relocate stores. By the end of fiscal 2004, the retailer will probably have opened 31 stores and relocated 29 more. In fiscal 2005, the company plans to build 30-40 stores, about evenly split between new sites and relocations. The expenses associated with the relocations (and one remodeling) will be an estimated $41 million in fiscal 2004 and $28 million in fiscal 2005. New and relocated stores are generally performing better than the rest of the chain, but these units make up a less than a third of the store base.
Will the retailer's upgrades bear fruit? Within the past several months, Circuit City has improved its Web site, gotten new merchandise into its stores (thanks to its acquisition of InterTAN last May), changed its advertising campaign, begun a rewards program for shoppers, set up an agreement that allows Verizon Wireless to operate a department within Circuit City's stores, and hired a chief merchandising officer. It is too early to evaluate the success of these steps, but they will begin to have a positive impact soon.
The company's stock-repurchasing program is ongoing. Circuit City is authorized to buy back up to $400 million of its stock. As of the end of the third quarter, it had bought back 24.8 million shares for $294.4 million. company will complete the repurchases in fiscal 2005.