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RICHMOND, VA-Circuit City Stores Inc. posted another loss in the third quarter ended Nov. 30 amid plans to continue an expansion in which the electronics retailer says it will open 30 to 40 new superstores in fiscal 2006. The company lost $5.9 million, or three cents per share in the latest quarter, compared with $28.1 million, or 14 cents a share, in the comparable quarter last year. Although Circuit City’s total sales rose by 3.8% to $2.5 billion from slightly more than $2.4 billion in the same period last year, as reported recently on GlobeSt.com/Retail, comparable store merchandise sales decreased 4.3% in the third quarter, disappointing both the company and Wall Street analysts who had expected an increase rather than a decrease in the comparable store figures.

W. Alan McCollough, the chairman, president and CEO of Circuit City, called the third-quarter results disappointing but said the company has made strides in “improving store-level execution and the overall efficiency of our operations.” McCollough cited “a general sales weakness” and a market that “was more promotional than we anticipated, particularly in the second half of the quarter” as some of the reasons for Circuit City’s poor performance.

Along with its quarterly results, the electronics retailer outlined plans for upcoming fiscal 2006, in which it plans to open 30 to 40 stores, half of which will be relocations. The expansions and relocations will be a continuation of a program the company began in fiscal 2001 in which it has relocated 60 stores. For this fiscal year, the company planned to open 60 new and relocated superstores and, as of the end of the third quarter, had opened 44 of the planned 60. Twenty-two of those that it did open were relocations, and it plans to open seven more relocations this year, along with nine new superstores. As of Nov. 30, it operated 622 superstores and five mall-based stores in 160 US markets. Its international segment operated through 1,026 retail stores and dealer outlets in Canada.

In its sales report released several weeks before its earning statement, Circuit City blamed some of its poor quarterly performance on its decision to be less promotional in music and movie software than it did during last year’s third quarter. It said the decision produced lower traffic and sales totals that were exacerbated by a weaker new release schedule. Second, the company’s “business model changes in digital satellite services and wireless phones and related products negatively impacted sales,” McCollough explained. In addition, the company’s decision to promote and price music less aggressively and to limit quantities of the most promotional offers on the Friday after Thanksgiving negatively affected that day’s sales, McCollough said.

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