The CEO of the consumer-electronics retailer is not commenting, but an activist investor expects an announcement of a possible sale shortly.
RICHMOND, Va. (AP) -- Circuit City Stores Inc. stayed mum on Tuesday about whether a buyout is in the future for the consumer-electronics retailer, but an activist investor expects an announcement of a possible sale within the next month.
Mark J. Wattles, whose investment firm holds a 6.5% stake in Circuit City (CC, Fortune 500), said three companies are in the late stages of conducting due diligence in regard to buying the Richmond, Va.-based company.
"The sniffing is over with," Wattles said after the company's annual shareholder meeting.
Wattles declined to identify the companies, but implied that one of those was Dallas-based video-rental chain Blockbuster Inc. (BBI, Fortune 500), which announced a more than $1 billion takeover bid in April with plans to create a chain that would sell electronic gadgets and rent movies and games.
Circuit City Chief Executive Philip J. Schoonover gave no update to investors about the company's hiring of Goldman Sachs & Co. (GS, Fortune 500) to explore strategic alternatives, saying there's no official time frame for any action.
Instead Schoonover defended Circuit City's turnaround plan, but acknowledged "some missteps in execution" and asked shareholders for time necessary to leverage the company's future.
"We're in a good industry despite headwinds in the economy," Schoonover said. "All this work is important and rational. We have significant opportunity to improve profitability in our core business."
Shares of Circuit City slipped 2 cents to $3.35 Tuesday, after sinking to a 52-week low of $3.20 earlier in the session and tumbling more than 21% on Monday. Shares have traded as high as $15.99 over the past year.
Earnings reports: Last week, Circuit City said its loss widened in the first quarter because sales at established stores fell more than 11%. It reported a loss of $164.8 million in the three months ended May 31, compared with a loss of $54.6 million a year earlier. Circuit City has seen only one profitable quarter since the second quarter of 2007.
Meanwhile, rival Richfield, Minn.-based Best Buy Co. (BBY, Fortune 500) last week reported a 7% drop in first-quarter profit, saying net income dipped to $179 million from $192 million.
Circuit City also forecast a wider second-quarter loss than analysts were predicting, and suspended its dividend to keep capital available for its turnaround efforts.
Board expansion: Shareholders on Tuesday voted overwhelmingly to expand the company's board to 15 in order to add three directors originally nominated by Wattles. Last month, Circuit City defused a proxy battle by agreeing to nominate the directors.
Those directors are: James A. Marcum, an operating executive at merchant banking firm Tri-Artisan Capital Partners and former chief executive at Ultimate Electronics; Elliott Wahle, chief executive of Toronto-based Rustique Home Furnishings; and Don R. Kornstein, a managing member of strategic management and financial consulting firm Alpine Advisors.
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