SAN FRANCISCO -- Sales at Circuit City ( CC) fizzled last month, as the electronics chain failed to capitalize on consumer demand for gadgets over the holidays. The company on Monday said its December same-store sales, or sales at stores open at least a year, dropped 11.4%, led by a falloff in its U.S. stores. Total sales tumbled 8.9% to $1.92 billion from $2.1 billion for the month. The results were widely expected to be dismal; Circuit City shares were
crushed last month after the company posted a bigger-than-expected loss for the third quarter and warned that it would be in the red for the current period as well. The company on Monday reaffirmed its guidance for a modest loss before taxes in the fourth quarter. Shares of Circuit City were down 1.2%, or 5 cents, to $4.16 in after-hours trading. Chief Executive Philip Schoonover tried to extract some good from the numbers but also readily acknowledged the company's shortcomings. "Our sales performance, while disappointing, was in line with our expectations," he said in a statement. "The company saw significantly improved performance over the last two weeks of the month, but the sales improvement was not enough to offset the weakness experienced at the beginning of the month." Schoonover said the company is working on training its employees to close their sales at a higher rate, as well as push accessories on customers. Circuit City is also looking to fix gross margins through better merchandising, marketing and price discipline, along with reduced expenses.
"Our efforts to turn around the business have led to greater disruption than we anticipated, but we continue to believe that we are on the right path to return to sustainable, profitable growth and increasing shareholder value," Schoonover said. Domestic sales for December decreased to $1.81 billion from $2.01 billion in the same period last year, while U.S. same-store sales fell 12.2%. Direct channel sales, including Web- and call center-originated sales, rose 17%, and PC services and home theater installation revenues increased 15%. In the video category, Circuit City generated a double-digit same-store sales decrease in December. Total same-store sales for televisions fell by low double-digit percentages. Declines in projection and tube televisions more than offset gains from flat panel televisions. Same-store sales of camcorders and DVD hardware decreased by double digits, while digital imaging products and accessories decreased by a high-single-digit rate. In the information technology category, Circuit City saw a high single-digit same-store sales decline. Same-store sales of notebook computers increased by a low single digit, while desktop computer comps declined by double digits. Same-store sales in the audio category fell by a double digit percentage in December. Although same-store sales for navigation devices increased by strong double digits, they were down by double digits for portable digital audio, digital satellite radio, home audio and mobile products. In the entertainment category, Circuit City generated a high same-store sales decrease, with a double-digit same-store sales increase in video gaming products being more than offset by double-digit declines in video software and music software.