The Wattles Plot Thickens at Circuit City

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In yet another sign that Mark Wattles is exercising increasing control of Circuit City, the electronics retailer on Tuesday named James Marcum vice chairman. Marcum, one of three directors named to the Circuit City board at the behest of dissident shareholder Wattles, is also on its executive committee.

The goal, the company said in a statement, is to “accelerate its turnaround,” although it acknowledges that strategic alternatives are still being pursued and Goldman Sachs is still on board if a prospective buyer surfaces. Since Blockbuster abandoned its abortive effort to buy Circuit City in June, the consumer electronics chain has continued to falter.

I still think Mark Wattles will buy Circuit City for pennies on the dollar (it’s $1.74 a share as I write this) and will put the same strategy in place that turned Ultimate Electronics from a loose group of regional electronics stores held together with spit and baling wire into a lean, well-managed operation focused on TVs.

According to This Week in Consumer Electronics, Marcum was chief financial officer at Hollywood Video, which Wattles founded, and later assisted him in the turnaround of Ultimate Electronics, which Wattles acquired in 2005.

Circuit City Chairman, President, and CEO Phil Schoonover was quoted thusly: “The board and I selected Jim for this role because he is a highly experienced retail turnaround executive. I believe he will be a great partner to me and the rest of the management team as we focus on ways to improve our business.”

Will Wattles finally make a bid or will we see a Chapter 11 filing before the holiday shopping season?

Tags: Circuit City Stores Inc., Electronics, Corporate Governance, Business Operations, Corporate Law, Lisa Everitt

A Denver-based business writer, Lisa Everitt is a veteran of daily and weekly newspapers and trade magazines, including The Natural Foods Merchandiser, Rocky Mountain News, Inter@ctive Week, San Francisco Business Times, and the Peninsula Times Tribune.

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08/21/08 | Report as spam

RE: The Wattles Plot Thickens at Circuit City

Chapter 11 would give them a way out of leases for unwanted real estate. If they hung on to the holidays, retail's 'golden quarter', they'd get one more trip to the trough. Shutting down as bankrupt on Dec. 26 would get them off the hook for after-sales customer care and post holiday refunds. Gift cards could even be void. They could stiff any suppliers dumb enough to extend credit to CC. Salaries, bonuses and commissions could be defaulted. The last wisp of shareholder value should be throttled out of the stock by then, reducing acquisition costs even further. By Jan. 1, they could have new signage and corporate graphics up in the stores and they're off to a fresh start. Will Wattles bid before Chapter 11? Mark me down for a "NO". Turning this pig around without screwing over everybody in the way is just too much work to make it a viable project.