Tag: CC

I have an interesting question about the group.

1. www.walmart.com (WMT)= 7.94%
2. www.target.com (TGT)= 5.06%
3. www.bestbuy.com (BBY)= 3.96%
4. www.sears.com / www.kmart.com (SHLD)= 3.72%
5. www.circuitcity.com (CC)= 3.07%
6. www.jcpenney.com (JCP)= 2.03%
7. www.toysrus.com (private)= 1.97%
8. www.macys.com (M) = 1.43%
9. www.kohls.com (KSS)= 1.3%

Data from Hitwise

The question? How in all that is holy can Circuit City be losing money? They have been in the top 5 all season and are currently the only one of the group losing cash. Pathetic comes to mind…

Wal-Mart has commanded essentially a 3% lead over #2 Target all fall. Now, with Target announcing a recent December sales disappointment, this 3% may be the difference for Wal-Mart being successful this holiday season. When you add Wal-Mart advertising of its very popular “site-to-st0re” program and Target’s lack thereof, a hard lesson may have been l;earned by Target execs this season.

What will be interesting is to see results from Sears Holdings which has a similar program but did not advertise it as hard..

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How could you announce million dollar “retention” bonuses for executives and then days later announce results like this? Watching these guys operate is like watching a monkey try to impregnate a football.

For the three months ended Nov. 30, Circuit City’s (CC) losses ballooned to $207.3 million, or $1.26 per share, from $20.4 million, or 12 cents per share, a year ago. Excluding tax-related accounting items, losses totaled 64 cents per share in the latest period.

Sales slipped 3 percent to $2.96 billion from $3.06 billion a year earlier, with sales at stores open at least a year falling 5.6 percent.

CEO Phillip Schoonover still insists Circuit City is on the right track. “We’re implementing the right initiatives to lead to profitability and sustained growth,” he said. “We’re staying the course on our longer-term strategic initiatives.” By long term do you mean by the end of the decade Phil? I mean it has taken you three years to ruin the company, do you really think you can bring it back faster?

Regarding the bonus announcements, Schoonover said the bonuses are essential to keep together a team he spent three years assembling. Three years assembling a team to get these results? Far from getting bonuses for staying with CC, these incompetent buffoons ought to be thanking god everyday they are even employed.

Bruce H. Besanko, Executive Vice President and Chief Financial Officer made the following inexplicable statement regarding the bonuses:

“The base program that we have in place was a combination of stock options and restricted shares. Because of the current stock performance, that program for many of our executives was underwater and so far underwater that it didn’t have any meaningful value over time. In addition to that, our senior most executives did not receive a bonus for the last two years and will not receive a bonus based on this year’s performance. So we have two plans now to retain those leaders. One is our cash-based retention program and two is a stock-based incentive program which is in line with our annual stock-based incentive program and I feel I have the tools in place now to keep the management and leadership as well as the managers at all levels in the company engaged in this work.”

Essentially, he is saying that because the executives performance has been so bad, under the old plan, they were not eligible for a bonus. That being said, CC decided just to lower the bar, just show up for the next three years, performance be damned to get your money. This is disgusting.

This makes me want to buy shares just to bash them every single day……how can shareholders stand for this?

If that isn’t enough to have shareholders going into vapor-lock, Schoonover then said, “We are very dissatisfied with our third quarter results. We underestimated the financial impact from the disruption of our transformation work.” Here it comes “We believe that these issues are primarily self-induced”.

He “believes” they are? What else could it be? What were they doing, remodeling stores in the middle of the Christmas shopping season? Shares are down 25% today and now down 70% for the year.

Back in June when people speculated Eddie Lampert and Sears might make a run at CC, I opined, “Eddie Lampert, based on past history would just be as likely to wait for these buffoons to run it into bankruptcy and buy it there even cheaper than now.”

It just may get there next year…..

Let’s not forget that current management turned down a $20 offer per share from private equity not too long ago…. shareholders will never see that price again, not with these guys in charge.

Finally, A note to Herb Greenberg: How can you in all intellectual honesty say Eddie Lampert at Sears Holdings (SHLD) is worse than this guy? Herb, Sears IS MAKING MONEY!!!!

This is a call for Herb to do a “do over” with his pick for 2007. We’ll give him a Mulligan or should we now call it a Greenberg?

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I guess we finally found out where the money Circuit City (CC) saved by “letting go” its highest paid and most experienced sales people earlier in the year is going, to the folks who made the ill-fated decision.

In an SEC filing, CC said the company’s board approved “retention awards” of $1 million for executive vice presidents and $600,000 for senior vice presidents. The awards will be effective as of January 1, 2008, and vest over a three-year period. Circuit City said the awards were intended “to ensure the stability of the company’s leadership team by providing an incentive” for the officers to stay.

Included in the payouts are Bruce H. Besanko, chief financial officer; George D. Clark Jr., executive vice president for multi-channel sales; and general counsel Reginald D. Hedgebeth.

CEO Philip Schoonover will not be participating in the retention plan, but would be able to receive long-term incentive awards under a 2003 stock incentive plan. Based on both the company’s and the stocks performance, Schoonover gets nothing and in all reality will be fired before next year is out anyway.

One would think shareholders would be outraged by this. They have watched this team lose almost 75% of the company’s market cap this year as shares have fallen from $22 to $6. If we go back a another year, the losses jump to 80% from $30 a share.

I guess the questions is, why would shareholders want to retain these guys? By almost every metric, Circuit City is worse off. Since FY 2005 ended its cash position has steadily deteriorated (from $1 billion to $400 million), debt has almost tripled and market share has plummeted. They did manage to raise the dividend this year from 16 cents a share from 7 cents in 2005 but given the company’s precarious financial situation, even that decision is questionable.

Both Best Buy (BBY), Wal-Mart (WMT) and Sears Holdings (SHLD) all have reported strong electronics sales this Christmas. If Circuit City does not do the same, there ought to be a shareholder revolt.

It just seems that every time we hear from Circuit City, they leave us scratching our heads. At least we are not shareholders, they are probably pounding their heads on a table.

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It is one thing to have competition no one goes to, it is another to have people then rush to it when they give things away. This may put a dent in both Best Buy (BBY) and Circuit City’s (CC) holidays.

In announcing the closing, CompUSA announced it will be offering “attractive bargains on computer and electronic products as part of store closing sales and its 103 retail stores will remain open through the holidays.

Earlier this year they closed over half of their U.S. retail stores in a bid to streamline operations and bolster margins at top-performing stores. Guess it did not work.

Long term this will benefit all electronics retailers like the one mentioned about and even Wal-Mart (WMT) and Sears Holdings (SHLD), for this holiday season though, it is not good news.

In order to rid itself of inventory, undoubtedly CompUSA will be selling merchandise below cost. It is a move unlikely to be replicated by other retailers and this will affect sales during the next 4 weeks in the 103 markets that have the CompUSA locations.

Will it break the holiday season for other retailers? No. It does have the definite possibility of making a good one average or an average one poor though. If anything good comes of we may get a pullback in one of the names as folks over react to the news and get a nice entry price for shares (except Circuit City).

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Why not? As long as Herb Greenberg is going to name him the “worst CEO”, a job he does not hold, how about that too? Come on Herb, this is lousy even for you….

I have a policy of not going after fellow bloggers but when the column written is just so outrageous and fundamentally flawed, well, if you open the door…

Other who made the cut were:

Chuck Prince, formerly of Citigroup (C)
Ed Zander (MOT) of Motorola
Peter van Stolk of Jones Soda (JSDA)
Angelo Mozilo of Country Financial (CFC)
Kerry Killinger of Washington Mutual (WM)
Jimmy Cayne of Bear Stearns (BSC)
Scott Hartman, of subprime lender NovaStar (NFI)
Mesa Air’s (MESA) Jonathan Ornstein
Phil Schoonover of Circuit City (CC)

Every one of the institutions is currently near crippled and more than two will be bankrupt soon. Three of the CEO’s are gone with at least another 3 on the brink. Yet, somehow Lampert is worse?

Here is what this is. Those guys will make everyone’s list this year BECAUSE THEY DESERVE IT. Herb, being the smart guy he is realized that he need to pick someone NOBODY else else would lest his pick just get caught up in the wash of the blogsphere and become irrelevant.

Enter Lampert, a guy who does not even hold the title Herbie gives to him. What is really ironic here is that Greenberg eliminates Zander, Prince and von Stolk who were so bad, they either are no longer employed or soon will be “because they are no longer CEO”. Oh, so lets pick a guy who “never was CEO”? Herb, don’t you think this is just a bit hypocritical, even for you?

What you have in Sears Holdings (SHLD) is the combination of two retailers that prior to Lampert’s purchase we on the trash heap. Kmart was bankrupt was Sears was racing there as fast as it could get there. Now the combination throws off about a billion dollars a year for Lampert and unlike most of the above companies, is still very profitable. Not bad in only two and a half years, huh Herb?

Recently Sears has been caught in the retail environment like Macy’s (M), Home Depot (HD), Lowe’s (LOW) and JC Penny (JCP). If we look at the following 1 year chart, see anything familiar Herb?

The largest one year loser? The very JC Penny that Herb trumpets in his column…

You see Herb, Sears get 40% of revenues from appliances. Those are those big expensive things in you house that if people are not buying and remodeling homes these things go unsold. Since Sears is the #1 retailer with about 20% market share for them, logic would tell you the hit here would be far worse than the others. Right?

If folks are not going there for these things, they also do not pick up the ancillary item they buy when in the store. In a nutshell Herb, this is Sears problem. So, while we wait this out, Lampert is busy buying up shares by the truckload so that when housing turn around and yes it will Herb, Sears EPS will jump as people will resume buying these items again.

I am sure Lampert is somehow responsible for the housing crisis, after all if he isn’t your entire article is, well, just bad journalism… Let’s not make things up Herb.

To say Lampert is “the worst” at a job he does not even have and is worse than the list above justs show desperation on your part. Desperation for relevance in an arena once dominated by folks such as yourself, now owned by us all.

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