Remember my post from earlier this year, Circuit City, I'll never shop you again?
The ninth-most commented upon post in this blog for 2007 featured my outrage at Circuit City jettisoning some 4,000 experienced sales personnel and hiring younger workers so that it could save some money.
But as of today, nearly nine months since I wrote that post, a piece in the financial news site TheStreet.com notes today's 25% decline (actually closer to 29%) in the price of Circuit City stock, as well as some of the numbers from a "dreadful third-quarter report."
Dreadful as in these details reported by The Street.com's Pia Sarkar.
The company reported a loss of $207.3 million, or $1.26 a share, widened from $20.4 million, or 12 cents a share, a year earlier.
The bottom line was in part weighed down by a $102.8 million charge to establish a valuation allowance for deferred tax assets. Excluding the charge, the loss was 64 cents a share, still well worse than analysts' expectation of 31 cents, based on Thomson Financial's mean estimate. Sales fell to $2.96 billion from $3.06 billion the prior year, missing analysts' target of $3 billion. Same-store sales, or sales at stores open at least a year, dropped 5.6%.
But the real "there is justice in this world" realization comes to me after reading Sarkar's analysis of what drove these numbers down. Sarkar added some thoughts to those of GET THIS!- Circuit City's own CEO, Phil Schoonover.
Earlier this year, the company announced a sweeping restructuring, with one of its plans involving the layoff of 3,400 employees in favor of lower-paid workers. Analysts say that has come back to bite the company as inexperienced staff results in weaker levels of customer service and disorder in its stores.
"We believe that these issues are primarily self-induced and are within our control to improve," said Schoonover. "Though there is more work to be done, we started to address the execution issues and experienced sequential improvements in close rate, and our key TV attachment basket improved each month of the quarter after hitting a bottom in August."
More work to be done? Hey Phil, fire the bean counters and hire back the pros you cut loose.