Q: Do you think my Circuit City Stores Inc. stock can perk up again?
F.M., via the Internet
A: Activity surrounding the consumer electronics chain, which ranks No. 2 behind the more profitable Best Buy Co., is increasing.
Mark Wattles, the founder and former chief executive of the Hollywood Entertainment Corp. video-rental chain, has acquired a 6.5 percent stake in Circuit City.
Wattles, who owns the 32-store Ultimate Electronics chain, is critical of Circuit City management and seeks to remove all board members other than his own five nominees.
He wants to force repeal of bylaw amendments or new bylaws that weren’t first submitted to shareholders. His proposals will be considered at the shareholder meeting scheduled for June 24.
Shares of Circuit City (CC) are down 12 percent this year after declines of 78 percent last year and 16 percent in 2006. It has a decent balance sheet but lagging sales and losses from restructuring.
CEO Philip Schoonover, who joined Circuit City in 2006, laid off more than 3,000 employees last year, recently sent some top executives packing and has pushed a smaller, less-expensive store format. After closing, relocating and remodeling stores, he said he has saved $200 million annually.
The company, which insists it is not for sale, recently doubled its credit line by $800 million and extended the expiration date to 2013. John Harlow, former U.S. operations chief for A&P and most recently at Deloitte Consulting, was named executive vice president and chief operating officer.
Consensus rating on the stock of Circuit City is “hold,” according to Thomson Financial, which consists of two “buys,” 22 “holds” and one “sell.”
Competition is fierce in consumer electronics. One concern is the possibility that the flat-screen television boom has peaked, with recent sales based in large part on sharp price cuts.
Reduced activity would take a big bite out of profit potential.
The TCW Group Inc., formerly Circuit City’s largest institutional investor, with nearly an 11 percent stake, reported in January that it sold almost all its holdings.
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E-mail him at yourmoney @tribune.com.