Will Circuit City be this year's Scrooge?

By Tim Conneally, BetaNews

November 26, 2007, 12:20 PM

Consumer electronics retailer Circuit City is showing an early improvement in holiday sales, thanks in part to widespread employee cutbacks.

Circuit City sales this past weekend were reported to have risen 3.7% over the previous year, although things could perhaps only gotten better after its apparently disastrous 2006. The good news gave Circuit City shares a 25.6% boost in early trading this morning on the New York Exchange, though shares settled back to near their Friday lows of $6, perhaps after investors did the some research on the back end.

Early indications are looking good for the Richmond company despite a large cutback in workforce that took place earlier this year. Last March, Circuit City began laying off approximately 3,400 of its highest-paid hourly workers to cut back operating costs.

The cutback of what are effectively the most experienced salespeople for the company could have had an adverse affect on sales, but reports this holiday season are already more favorable than last year's.

In SEC filing last April, Circuit City reported 2006 holiday sales were up 2.7% over the prior year, but profits were actually down 2.5%. Citing a decrease in flat screen TV sales, and uncertainty in the PC hardware market due to the transition to Windows Vista, the company looked forward to becoming profitable again through what it called "tough choices that had to be made to remain competitive."