Circuit City announced this morning a series of changes that it hopes will better "align the company to meet the changing nature of the consumer electronics retail marketplace as well as improve financial performance." Tumbling gross margins from the flat-panel TV sector forced the company to accelerate its planned initiatives in the hope of improving sales, margins and efficiency. Circuit City will overhaul its operations, close stores and a distribution center, and shake up its merchandising team. It plans to take a $30 million pretax expense for store closings, another $40-60m on goodwill losses, and $15m in restructuring expenses -- most of which will appear in FQ4 2007.
Sources: Press Release, MarketWatch
Commentary: Don't Expect LCD Prices To Recover Anytime Soon • Best Buy, Circuit City Surprise Analysts with Strong December Sales • Circuit City F3Q07 (Qtr End 11/30/06) Earnings
Stocks/ETFs to watch: Circuit City Stores Inc. (CC). Competitors: Best Buy Co. Inc. (BBY), RadioShack Corp. (RSH), Tweeter Home Entertainment Group Inc. (TWTR), GameStop Corp. (GME), Dell Inc. (DELL), Wal-Mart Stores Inc. (WMT). ETFs: PowerShares Dynamic Retail (PMR), SPDR Retail (XRT), PowerShares Dynamic Hardware & Consumer Electronics (PHW), Consumer Discretionary SPDR ETF (XLY)
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