This summary is based on the third quarter fiscal 2007 earnings call conducted by Circuit City Stores Inc. (CC: chart) on December 21, 2007.

Management:
Chairman, President, and Chief Executive Officer: Philip J. Schoonover
Executive Vice President and Chief Financial Officer: Bruce H. Besanko
Executive Vice President of Multi-Channel Sales: Danny Clark
Chief Merchant: John Kelly
Director of Corporate Communications: Bill Cimino

Key Investors Issues

- The net loss was $1.26 per share as against 12 cents in the prior year quarter.
- Quarterly revenue dropped from $3.06 billion in prior year to $2.96 billion.
- Fiscal year to date, the firm repurchased 60 million shares for $966 million.
- For the Q4, the company expects to deliver a modest loss before taxes.

Third Quarter Fiscal 2007 Financial Highlights

The net loss from continuing operations totaled $208 million, or $1.26 per share, compared to a net loss of $19.9 million, or 12 cents per share in prior year.

The company recorded $103 million tax expense to establish a valuation allowance against deferred tax assets in the domestic segment based on FAS 109 guidelines. Excluding the non-cash expense for the tax valuation allowance, the net loss from continuing operations would have been 64 cents per share for the third quarter of fiscal 2008.

Net sales decreased 3.1% over prior year to $2.96 billion.

Domestic segment sales declined 3.6% to $2.8 billion. The domestic sales decline was primarily driven by comparable store sales decline of 5.8%, which compared to a same store sales increase of 5.5% in last year’s third quarter. Comparable store sales declined in both September and October, with October significantly lower than September. In November, comparable store sales improved to a single-digit positive driven by a double-digit comparable sales gain over the Black Friday weekend. However, the firm did experience sales weakness in the Southeast as well as the West, more so than other areas of the country, which is attributable principally to the macroeconomic climate. On the positive side, the company does see evidence that some efficiencies are being delivered from retail transformation, including an improvement in the time it takes to greet the customer and customer perception of its associate availability. The company will use the early part of next fiscal year to refine the platform and begin to master the work, including re-focusing on selling behavior such as recommending accessories, warranties, and services. As the firm masters the work over the next several months, it believes that it will see continued improvements in attachment rates, close rates, overall sales and margin rate, while keeping expenses in line.

- In the video category, Circuit City generated a high-single-digit comparable store sales decrease in the third quarter. Comparable store sales of flat panel televisions increased by double digits. Total television comparable store sales decreased by a high single digit, as significant comparable store sales decreases in projection and tube televisions more than offset the flat panel television increase. Comparable store sales of camcorders and DVD hardware decreased by double digits. Comparable store sales of digital imaging products and accessories decreased by a low single digit.

- In the information technology category, Circuit City generated a low- single-digit comparable store sales increase in the third quarter. Comparable store sales of notebook computers increased by double digits, and comparable store sales of desktop computers declined by double digits.

In the audio category, Circuit City generated a double-digit comparable store sales decline in the third quarter. Comparable store sales of navigation products increased by triple digits. Comparable store sales of portable digital audio, home audio, mobile and digital satellite radio products declined by double digits.

In the entertainment category, Circuit City generated a double-digit comparable store sales increase in the third quarter, reflecting a strong double-digit comparable store sales increase in video gaming products. Comparable store sales of video software and music software declined by double digits.

In international segment, sales increased 5.9% primarily reflecting the favorable impact of foreign exchange rates and offset by a comparable store sales decline of 1.1% in local currency and more than 70 store closings in the last year.

Consolidated gross profit margin declined by 300 basis points from last year.

Domestic segment gross margin rate declined 331 basis points. The decrease was driven by decreases in television margins, extended warranty net sales, PC hardware margins, as well as a greater mix of PC hardware sales.

International segment gross profit margin increased 152 basis points and did not materially impact the consolidated rate decline.

Consolidated SG&A expenses as a percentage of sales increased by 53 basis points.

In the domestic segment, the key drivers of this increase were the overall de-leveraging impact of lower sales, an 80 basis point increase in expenses related to the 35 new domestic segment superstores that have opened during the past twelve months, and a 38 basis point increase in relocation and remodel expenses. The increase was partially offset by a 95 basis point decrease in compensation costs that resulted primarily from the firm’s expense reduction initiatives.

The international segments expense to sales ratio increased 36 basis points and impacted the consolidated rate increase by 17 basis points. The management believes that it is on track to take out $150 million this year versus its run rate which annualizes the $200 million in fiscal 2009, although it expects that these savings will be partially offset by incremental expenses associated with its long-term strategic plans.