Shares of Circuit City ( CC) plunged again Tuesday amid rumors that the company's remodeling strategy would prove more costly than initially anticipated.

Circuit City fell 16% Tuesday following a 10% slide Friday after at least one analyst voiced concern over the timeliness and costs associated with renovating the firm's stores.

Scott Ciccarelli, an analyst for Gerard Klauer Mattison & Co., said while Circuit City probably hasn't yet decided which strategy to pursue, it is possible the company will opt for a more expensive remodeling effort if it believes that it would be in the best interests of the company over the long term.

"If that is so and the benefits from the remodeling efforts take a while to manifest, our earnings estimates could be at risk," he wrote in a research note.

Circuit City's renovations are part of an effort to revamp the company after it abandoned the market for large appliances last year to focus on sales of electronic devices and games.

Ciccarelli had assumed the firm would spend roughly $700,000 to $800,000 per store, which would not impede the firm's near- to mid-term financial performance. However, under a more expensive plan, the company could spend as much as $1.5 million per store, he said.

Further, if Circuit City were to accelerate the remodeling plans, he forecast that it could cost the company about $150 million in fiscal 2003, or $60 to $75 million more than previously thought.

"We believe the stock is likely to experience selling pressure during the next few weeks, until the company's remodeling efforts become more transparent," he noted.

Colin McGranahan, an analyst at Bernstein, said he has spoken with the company and that they have not made a decision about the renovation plans. "This is all speculation," he said. "They'll talk about it when they're ready."

Circuit City declined to comment on the rumors, or the drop in the stock price Tuesday.

McGranahan attributed the sell-off to potential concerns about the securitization of credit cards. "A large portion of their earnings come from their credit card operations," he said. "There's been a lot of negative sentiment around that."

Meanwhile, David Campbell, an analyst at Davenport, said management's reluctance to divulge information and fears of an accounting blow-up may be behind the recent decline in share price.

"They have conservative accounting but their financial statements are complicated," he said.

In recent weeks, investors have punished companies that have had any hint of accounting impropriety. IBM slid to a four-month low Tuesday on such concerns and Nvidia fell sharply after disclosing a Securities and Exchange Commission inquiry.

Circuit City has soared 123% to $22.11 since hitting a low of $9.88 on Sept 18. The company has benefited from surging demand for home entertainment products like video games and DVD hardware. "The stock definitely got ahead of itself," McGranahan said.

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