Those still holding shares of decimated Circuit City (CC) may finally have a reason to be optimistic….maybe.
Mark J. Wattles disclosed plans to nominate his own slate of five directors at Circuit City Stores Inc., criticizing managers for failing to deliver a turnaround. Finally, a shareholder speaks up!!
In an inteview with the WSJ, “Wattles said he nominated the slate after being rebuffed in recent attempts to meet with Circuit City executives, whom he criticized for worsening the company’s financial picture. He said executives have “lost the faith” of employees and investors, and he expects an election of his slate would help lead to a new management team.”
Hallelujah!!!!!
Wattles said he is “in complete disagreement” with CEO Philip J. Schoonover’s appraisal of the chains situation. “The current CEO has been the president or CEO for three years now,” Wattles said. The company’s annual pretax earnings, once as high as $400 million, are now estimated at a loss of $100 million to $200 million for the fiscal year. Shareholders have lost 80% of their value in that timespan.
According to The Journal, Wattles also took Schoonover to task for what he said was a history of blaming past management and bad retail locations for the company’s problems. “The solution is not in changing real estate. The solution is changing the way they operate in existing real estate,” said Mr. Wattles.
In June of last year I said, “Should you buy CC now? I would stay away as long as current management is there.” This still holds true. Unless Wattles can get control of the board and make management changes, CC shareholders are still in trouble.
Now, can he take control of the Board, and asks Schoonover to “pursue other opportunities”, this company then becomes very interesting. I have said in the past “CC has appealing stores in good locations with a nice product mix, they are just abysmally run.”
Once Schoonover and his “vision” are gone. Shares become attractive. Once we know who will take his place and what the plan is, time to take a real close look.
It will be a log time before CC takes on Best Buy (BBY) or even Wal-Mart (WMT) or RadioShack (RSK) for consumers electronics shopping preference. But, that does not mean they cannot be profitable and make new shareholders very happy.
Disclosure (“none” means no position): Long WMT, None
