Circuit City stock swoons

By LOUIS LLOVIO
RICHMOND TIMES-DISPATCH
Published: August 28, 2008

Shares of Circuit City Stores Inc. closed at a 20-year low yesterday, down 5 cents at $1.52.

Not since Dec. 31, 1987, have shares of the Henrico County-based electronics retailer been as low.

In an e-mail yesterday evening, company spokesman Jim Babb said Circuit City did not comment on the day-to-day movement of its stock.

The stock was trading between $2.50 and $2 for most of July, but it dropped under the $2 threshold Aug. 6.

Shares hit a 52-week high of $11.44 on Aug. 27, 2007.

Kent Engelke, an analyst for Capitol Securities Management Inc., a McLean-based asset management firm, said Circuit City is struggling under the dual pressures of a bad economy where consumers are cutting back spending and poor management at the company.

“Circuit City has made a lot of missteps,“ Engelke said. “One day business schools are going to look back and study where they went wrong.“

The retailer’s two biggest mistakes, he said, were doing away with appliance sales in the 1990s and ridding itself of its most seasoned salespeople in a series of moves last year.

Still, Engelke believes the company can turn around its share price if it finds a way to turn a profit, which it has done just once since the second quarter of 2007.

As for the likelihood of a buyer, those hopes are slipping, Engelke said.

“If the economy continues to deteriorate for the consumer,“ the chance of that happening will grow slimmer, he said.

Contact Louis Llovio at (804) 649-6348 or .