Circuit City (CC) sacked the CEO who ran the company for the past four years. Philip Schoonover held every important job at the retailer from chairman to CEO to president. He was ejected because the fortunes of the electronics retailer have continued to fall. The company’s shares trade below $2. Their 52-week high was more than $9.
At its core, the problem that Schoonover faced was that Circuit City could not be fixed. He was on a fool’s errand and was paid well for the pursuit.
Circuit City is one of a growing number of retailer which are too small or too poor to compete with the likes of Wal-Mart (WMT), Best Buy (BBY), CostCo (COST), and Target (TGT). These large companies have sucked all of the air out of the room. Shoppers are not likely to go to other discount stores, especially when there are so few shoppers to go around.
Circuit City is one of a large number of retailers that are not likely to survive the bad economy and their own lack of aggression and inventiveness. Sears (SHLD) is in the group. Macy’s (M) may be as well.
Kicking out CEOs will not solve the problem at these weaker companies. They are what managements fear the most–companies which cannot be saved.
Douglas A. McIntyre
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