The head of Circuit City Stores Inc. was forced out by the company's board Monday after months of lackluster sales and an aborted takeover effort by Blockbuster Inc. that cast doubts on the future of the nation's second-largest electronics retailer.Philip J. Schoonover, who served as chairman, president and chief executive officer, was brought in from industry leader Best Buy Co. four years ago to turn around Circuit City. Instead, the 48-year-old executive, who was named CEO two years ago, presided over a further decline in the company's fortunes.
Following news of his ouster, Circuit City's stock jumped 11% to $1.89 in after-hours trading. The shares had finished 4 p.m. composite trading on the New York Stock Exchange at $1.70, down 10 cents, or 5.6%.
Mr. Schoonover, who couldn't be reached for comment, was immediately succeeded by James A. Marcum, who will serve as acting president and CEO. Mr. Marcum was elected to the board in June after being nominated by activist investor Mark J. Wattles, whose investment firm owns 6.5% of Circuit City.
Mr. Marcum, 49, was formerly an operating partner of Tri-Artisan Capital Partners LLC, a merchant-banking firm, and was a senior executive at Hollywood Entertainment Corp., a home-video retailer founded by Mr. Wattles.
Circuit City's board elected as its chairman Allen B. King, 62, a former chairman of tobacco company Universal Corp.
"A change in leadership at the chief executive officer level is always a difficult decision," Mr. King said in a statement, adding that Circuit City's board "is committed to accelerating the pace of the company's turnaround."
Circuit City's new leaders are actively soliciting bids for the Richmond, Va., company.
Blockbuster's unsolicited offer to buy Circuit City for $1 billion, or about $6 to $8 a share, ended in July when the video-rental giant got cold feet. Colin McGranahan, retail analyst at Sanford C. Bernstein & Co., said Mr. Schoonover made several blunders over the years, such as replacing 10% of the highest-paid, most-seasoned staff in the company's stores, in an effort to reduce costs and recoup losses caused by falling TV prices.
"He underestimated the disruption that would cause," Mr. McGranahan said. "If you worked at Circuit City, the only way to interpret it was that if you do well, you will be fired."
Circuit City is scheduled to report second-quarter results next Monday. Analysts polled by Thomson Reuters are forecasting a loss of $1.04 a share. But the company said Monday it expects the results to be slightly better than the pretax loss of $170 million to $185 million it previously predicted.
By: Miguel Bustillo and Ann Zimmerman
Wall Street Journal; September 23, 2008
