Newspaper article THE JOURNAL RECORD

Competition Squeezes Circuit City Sales

Newspaper article THE JOURNAL RECORD

Competition Squeezes Circuit City Sales

Article excerpt

RICHMOND, Va. (Bloomberg) -- Circuit City Stores Inc. said its same-store sales fell 10 percent in April, as the electronics retailer eased up on promotions while competitors aggressively cut their prices.

The unexpectedly large decline, Circuit City's worst performance in at least five years, follows heightened competition from Best Buy Co. in electronics and Sears, Roebuck & Co. in appliances. It's the seventh straight month of slow or slipping sales growth for the retailer, which long boasted double-digit gains.

"The pie is not growing right now and everyone is fighting for the electronics and home appliance sales dollars," said Chicago Corp. analyst Mark Mandel.

The slowing sales at stores open at least a year is why Circuit City is increasingly turning away from the saturated consumer electronics market and toward its fledgling CarMax used-car business. It hopes to apply the same skills that made it the leading consumer electronics seller -- strong service and selection -- to the highly fragmented auto market.

"The late model used car business is so big that Circuit City doesn't have to be in consumer electronics," said Otto Grote, an analyst with Derby Securities. "It could be the last ma and pa business in retail that is worth $120 billion a year."

Still, its CarMax concept, which now includes five open stores and the addition of two more this year, has yet to make a profit. It also faces looming competition. Wayne Huizenga recently sold his AutoNation USA chain to Republic Industries Inc. and auto dealers and makers plan to duplicate the concept.

Still, the used car business may give Circuit City a chance to revive its earnings, which fell in the fourth quarter for the first decline since 1991.

The decline in sales at stores open at least a year doesn't indicate that Circuit City is faltering, analysts said. …

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