In a move the company is calling a “last ditch effort,” Henrico County-based Circuit City Stores Inc. said today that it will change its name to Best Buy in hopes of boosting sales and returning to profitability.
Wall Street analysts called the move “the best strategy yet” by the struggling Fortune 500 consumer electronics retailer as part of its three-year turnaround effort. Shares soared from $4.65 to nearly $44 on the New York Stock Exchange.
“Though we have tried to aggressively implement strategies that would support our long-term vision and give our shareholders the returns they deserve, we feel none will work as well as the decision to change our name,” said Circuit City chairman and CEO Philip J. Schoonover. “Unlike our current name, we feel the new one accurately reflects a company that understands the consumer electronics business.”
Schoonover said the new name will be matched with revised corporate colors of blue and yellow, “vibrant hues that better present a store with a bright, customer-friendly shopping experience.”
Circuit City’s traditional round, red circle will also be transformed into a yellow hexagon that resembles a price tag, the company said. In addition, many Circuit City store employees will get training for the first time in a program that gives them essential selling information such as what constitutes a flat-screen TV, where the DVD goes, how digital cameras work, where on/off buttons are located and the differences between laptop and desktop computers.
The company also plans to show store employees how to open another register lane when lines are backed up, and give them the ability to walk – sometimes up to 100 feet – to help a customer in need, the CEO said.
Analysts applauded the Circuit City announcement.
“Electronics is an extremely difficult industry to play in, and the latest upheaval showcases a simple desire by Circuit City to become No. 1,” said Sanford C. Bernstein retail analyst Ryan P. Fischer. “Obviously, they’ve realized what it takes to be a truly great electronics store, with a name which defines a company that can navigate these rough waters.”
The latest effort by Circuit City follows a series of poorly-executed turnaround moves in the past three years.
In early 2006, critics hounded Circuit City after it outsourced roughly 800 in-store U.S. jobs to India. Then last year, the 600-store chain saw a loss of nearly $22 million after attempting to open a store at a Naval research base in Antarctica.