Those still holding shares of decimated Circuit City (NYSE: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!!
From 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
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 gain
control of the board and make management changes, CC shareholders are
still in trouble.
Can he take control of the Board, and
ask Schoonover to "pursue other opportunities"? This
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, it is time to take a real close look at CC.
will be a long time before CC takes on Best Buy (NYSE:BBY) or even Wal-Mart
(NYSE:WMT) or RadioShack (RSK) for consumer electronics shopping
preference. But, that does not mean they cannot be profitable and make
new shareholders very happy.
Disclosure: Long WMT.