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Circuit City

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posted a weak third-quarter sales preview, signaling that its attempts to revitalize its brand in consumer electronics are still being eclipsed by stronger competitors, such as

Best Buy

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The company said Monday that its same-store sales, those at stores open for at least a year, fell 4.3% in the third quarter. It attributed the decline to a strategic decision to back off on promotional activities in music and movie software, and a business-model change in digital satellite services and wireless phones.

Total sales increased 3.8% to $2.50 billion, vs. $2.41 billion in the year-ago period. Wall Street had expected revenue of $2.6 billion, according to consensus estimates from Thomson First Call. Analysts are forecasting Circuit City will post a loss for the quarter of 4 cents a share. The results will be released before the market opens on Dec. 17.

"Our sales performance in the third quarter did not meet our expectations, and the weakness was magnified by a number of factors," the company said. "The decision to promote and price music less aggressively and to limit quantities of the most promotional offers on the Friday after Thanksgiving had a negative impact on that day's sales."

Declining music and movie software sales accounted for around 160 basis points of the company's overall comparable-store sales decline. A drop in digital video service sales was responsible for a 120-basis-point decline, and a decrease in wireless sales accounted for about 90 basis points of the company's shortfall.

While total domestic sales fell 2.1% in the quarter to $2.36 billion, the company's recent acquisition in Canada, InterTAN, righted the ship, with a sales gain of 14.5% to $142.2 million.

During the quarter, Circuit City repurchased 4.5 million shares at a cost of $69.4 million. It opened 18 new stores, relocated 12, and fully remodeled one. The company expects to open another nine stores and relocate an additional seven in the fourth quarter.

Shares of Circuit City were recently down $1.28, or 7.9%, to $14.93.