Friday, December 21, 2007

Circuit City: A continuing sad saga

Very rarely do you witness analysts asking the CEO to throw in the towel, sell the company, and step down in the quarterly conference call. At Circuit City this is becoming a regular routine.

While sales at nearest competitor Best Buy rose, Circuit City’s sales slipped 3 percent to $2.96 billion from $3.06 billion a year earlier, with sales at stores open at least a year (a closely watched retail metric) falling 5.6 percent. The financial performance did not fare well either despite cutting all those “highly-paid” associates in stores, “losses ballooned to $207.3 million, or $1.26 per share, from $20.4 million, or 12 cents per share, a year ago”.

The management team lead by CEO Philip Schoonover maintains the company is on the right track and said, "We're staying the course on our longer-term strategic initiatives." It appears the master strategy is to turn on the jets and dive towards bankruptcy.

In a further absurdity, Circuit City announced the approval of millions in cash incentives to retain its executives. These are the same executives that canned all the top performers in stores earlier in 2007 and then watched the stock drop 70% since.

“The bonuses didn't sit well with Merrill Lynch analyst Danielle Fox, who questioned whether Circuit City should be focusing on incentives for the people who sell its products in stores.”

It appears to be time to officially place Circuit City on the “death watch” list. Shortly they can join CompUSA in shuttering all the stores and auctioning the remaining inventory.

Circuit City Posts Huge 3Q Loss
Circuit City Posts Wider-Than-Expected 3rd-Quarter Loss, Shares Tumble


senk8105 said...

Circuit City's bad results are exactly what it deserves for its dubious decision earlier this year to lay off thousands of experienced workers simply because, in the myopic eyes of Philip Schoonover and his fellow greedhead execuscum running the company into the ground, they made too much money. How interesting that such cost-cutting zeal rarely if ever extends to executive salaries and perks--certainly not at Circuit City!

Like millions of other thinking Americans who are deeply concerned about working people and their plight in our "Bushed" economy, I told Schoonover that his bonehead move earlier this year had cost Circuit City my business. Is he listening at all--if not to what so many once-loyal customers have told him, to what the market is now telling him? It seems not.

What is truly sad about this unfolding saga is that Schoonover and others "responsible" in the continuing Circuit City fiasco will likely walk laughing all the way to the bank, all but laughing and thumbing their noses at the rest of us. Who is overseeing these jerks? When will the Circuit City board give them *their* pink slips and rehire the people who *really* made for Circuit City's success--its experienced rank-and-file workers?

As I wrote to Schoonover in an e-mail this past May:


By penalizing rather than protecting or rewarding high-performing employees, by laying off, not mediocrities or stumblebums (including, in many cases, highly overpaid executives and managers whose decisions and actions, far more than any rank-and-file workers in most firms, are the ones that drive such companies into the ground), but their *best performers first*, Circuit City and its ilk are sending a frightening message to American workers about loyalty and high-quality work.

*To get loyalty, one must first give loyalty.* By unilaterally shredding the "social contract" that guided employment relations throughout most of America from the New Deal era until the time of Ronald Reagan, greedy, out-of-control employers like Circuit City are continuing not only the destruction of America's middle class, but America itself.

Don't laugh, Schoonover. People in America who believe as I do are everywhere. We are outraged at what we've been seeing happen to our once-beautiful country, our economy, and our living standards, especially since the early 1980s and Ronald Reagan, and even more so under George W. Bush.

Whenever workers' sovereign rights are violated by arrogant, out-of-control employers like Circuit City, we as a society need to start imposing stern financial penalties and, when need be, long prison sentences upon those who violate workers' rights; swift confiscation of "responsible" executives' and managers' personal and corporate assets and their redistribution to wronged workers; public humiliation of those who dare to violate workers' rights; and, when need be, legalized seizure of and takeover by workers of corporations that violate workers' rights.

Don't laugh, Schoonover. People in America who believe as I do are everywhere. We are angry at what we've been seeing happen to our once-beautiful country, our economy, and our living standards, especially since the early 1980s and Ronald Reagan, and even more so under George W. Bush.

Bet on it--we *do* write our lawmakers and take into account employers' actions when we decide whose products and services we will or won't buy--or recommend. And we *do* write letters to news media and post on the Internet about these issues. Yes, Schoonover, that *does* include you and Circuit City.

For the record, I will henceforth do all I can to avoid doing business with your company and will now urge others to consider how you and Circuit City have treated employees when considering where to shop.

History can and again will repeat itself. Working people will rise again, never again to be defeated. We will make it clear to out-of-control corporations and the rich, yours and you included, that *we* own this country and its economy, and that *we* are in charge here.

Let me know what you and your fellow Circuit CIty execuscum think of *that*, boy.

Do let me know what you have to say for yourself--and for Circuit City. I am very interested in knowing what you have to say for yourself and your company.


Naturally, neither Schoonover nor any of his well-paid flacks ever deigned to reply. Sad that they're not the ones who will ever pay any real price for their treatment of their former workers and customers.

What will it take for them to wise up and realize what's building "out there" against corporate abuses in America and worldwide? They'll doubtless continue as clueless as so many French aristocrats were as they were forced into the tumbrils.

Scott Enk