Circuit City Presentation

CIRCUIT CITY By: Nicholas Holt, Silvana Karam, Ashish Patel

Mission Statement
Previous Mission Statement:
Throughout our 50+ year history, Circuit City has differentiated itself by creating a shopping experience focused on customer needs and expectations. With over $10 billion in sales, we have grown into a Fortune 500 company of over 35,000 people, with more than 600 stores in more than 100 markets. With our current branding efforts, new store designs, and implementation of process improvement practices, today is one of the most exciting times in the history of Circuit City! It is a time of strategic change and revitalization !

Products and Services of Circuit City
TV & Home Entertainment
MP3 & Audio (iPod’s, speakers)
Computers & Office Supplies
Cameras & Camcorders
Car Electronics
Video Gaming (PS3, Wii, PSP, Xbox)
Movies & Music
Phones
Repair & Installation (Firedog)

Industry Sector
Sector: Services
Industry: Electronic Stores

Position in the Marketplace
Market Leader: Best Buy
Circuit City is the #3 Consumer Electronics Retailer in the industry after Wal-Mart
2008: Circuit City is #215 in the Fortune 500 company list.

Competitors
Direct Competitors
Best Buy
RadioShack
Wal-Mart
Dell
Indirect Competitors
CompUSA
Home Depot

Present Circuit City Stock
52 Week High: $18.87
52 Week Low: $3.44
Current Stock Price: $4.66
Current Stock Value has dropped 88%

Income Statement
The Operating Income or loss declines dramatically in 2007 due to the major turnover rate
As you can see, the Net Income of Circuit City dropped substantially in the past year.
2007 2006 2005 Gross Profit 2,928,316 2,830,932 2,568,723 Operating Income or Loss -5,303 220,399 97,855 Net Income -8,281 139,746 61,658

Profit/Loss Analysis

Balance Sheet
The Total Assets from 2005-2007 are gradually dropped while the Total liabilities from these years have gradually grown.
The Shareholder Equity has dramatically fallen in the past 3 years
2007 2006 2005 Total Assets 4,007,283 4,069,044 3,789,382 Total Liabilities 2,216,039 2,114,411 1,701,948 Total Shareholder Equity 1,791,244 1,954,633 2,087,434

Circuit City Timeline
1949: Samuel Wurtzel starts Wards Company in Virginia
1961: The company goes public
1979: The Superstore format is introduced (32,000sq ft)
1984: Changed its name to Circuit City and became listed in the NYSE
1999: CircuitCity.com is launched
2004: Acquired InterTAN, Inc.
2006: Firedog was operational
2007: Fired 3400 of the highest paid employees.
Announces plan to explore alternatives for InterTAN, Inc.

Management
CEO: Philip Schoonover
Former Vice President of Customer Segments for Best Buy
COO: John Harlow
CFO: Bruce Besanko
CMO: Peter Weedfald
Headquarters: Richmond, Virginia

Marketing
Community Involvement: Boys & Girls Club, Habitat for Humanity, United Way, and the American Red Cross
Wide array of offers from our partners
Napster
E-Commerce Site: circuitcity.com
“ Just what I needed”, “Simplicity guaranteed”
Attracts more customers over age 45

Main Competitors Marketing
Best Buy
“ Thousands of possibilities, get yours”
Targets younger consumers
Wal-Mart
“ Save money, live better”
RadioShack
“ Do stuff”
Circuit City spends more money on marketing compared to their leading competitors, yet the competitors still have an edge
Our competitors promote merchandise more aggressively and offer better discount prices for extended periods of time

Customer Service
Circuit City was rated the worst customer service in the electronic retail industry
Under-trained staff leads to a high turnover rate
Many of our associates are part-time, which affects our sales performance and competition
Numerous defective items and restocking fees

Positive Aspects of Circuit City
Offers a wide variety of products
Teamed up multiple partners…(Napster, InterTAN, Direct TV, SnapFish, Get Digital, SkinIt)
Firedog prices are much cheaper than Geek Squad

Development
650 stores in the United States
In 2003 Circuit City remodeled 222 stores
In 2005 Circuit City closed 19 of our underperforming Superstores
Openings in smaller trade areas and urban locations

If no changes are made…
Possible Bankruptcy
Hostile takeover by a possible buyer (Blockbuster, Inc.)
1.3 Billion Dollar Offer ($6-8 a share)
Merger with Blockbuster
Circuit City gains 4800 additional stores and differentiates itself from Best Buy by offering movie and video-game rentals

Porter’s 5 Forces
Threat of Entry of New Competitors
Small computer electronic companies
Threat of Substitutes
Non-brand name computers (Acer, Compaq)
Bargaining Power of Buyers (Elastic)
Bargaining Power of Suppliers (Inelastic)
Degree of Rivalry Between Existing Competitors
Pricing war between small companies

How to Start Over
Need a more experienced management team for Circuit City
In the past, hiring executive officials from other successful companies have worked out well
Better list of priorities and goals for the company to achieve

Objectives/Goals
Relocation & Closing of Circuit City Stores
Inside Malls
Beside large shopping plazas
Smaller and more specialized stores. Moving away from “superstores”
Getting rid of underperforming locations
Be more aggressive in buying new real estate
Be more aggressive in marketing and sales to raise market share
Hire more trained and skilled associates to improve customer service

Firedog
Make Firedog more available to small businesses
Clean sweep of the Circuit City Exec. Board
Discontinue international business
“ The City”
A more desirable shopping
experience
Objectives/Goals

Intended Results
The newly appointed executives will turn the company around with better long term decisions.
The opening of domestic segments
Prepared for future technology
Increased consumer traffic in sales due to better marketing
Will stay the #3 Consumer Electronics Retailer for now, long road ahead.

Conclusion
By making these changes, we truly believe that Circuit City can be turned around.
New Mission Statement : Circuit City is dedicated to the highest quality of customer service which is done with the highest respect. With a highly praised customer service and satisfaction, it will improve our sales performance. For Circuit City to effectively sell products to customers, sales representatives will try to understand and fulfill the customers needs. With a highly trained team of associates, Circuit City will be successful in the long run.

Circuit City Presentation

by Nick Holt

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