EX-1 2 transcript.htm transcript.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 1

CIRCUIT CITY
 
Moderator: Philip Schoonover
April 9, 2008
9:00 a.m. CT
 
 
Operator:                      Good morning. My name is (Elizabeth), and I will be your conference 
                                                                 operator today. At this time, I would like to welcome everyone to the Circuit 
                                                                 City fourth quarter results conference call. All lines have been placed on 
                                                 mute to prevent any background noise. After the speakers’ remarks, there will 
                                                 be a question-and-answer session. If you would like to ask a question during 
                                                 this time, simply press star then the number one on your telephone keypad. If 
                                                 you have already done so, please press the pound sign now, then press star 
                                                 one again to insure your question is registered. Thank you.
 
                                                 I will now turn the conference call over to Mr. Bill Cimino, Director of 
                                                 Corporate Communications. Sir, you may now begin. 
 
Bill Cimino:                       Good morning, and thank you for joining us today. 
 
                                                 Before we begin, I need to remind you that during this call we may make 
                                                 forward-looking statements which are subject to risks and uncertainties. We 
                                                 refer you to today’s release, the MD&A in our most recently filed annual 
                                                 report on Form 10-K and quarterly report on Form 10-Q, and to our other SEC 
                                                 filings for additional discussion of these risks and uncertainties. 
 
                                                 On today’s call, we may make reference to earnings or loss from continuing 
                                                 operations before income taxes, or EBT, and net earnings or loss from 
                                                 continuing operations, or EPS per diluted share, excluding the impacts of the 
                                                 impairment of goodwill and the tax valuation allowance. These measures, as 
                                                 adjusted, are not measures of performance that are defined by generally 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 2

                                                 accepted accounting principles, or GAAP, and are not to be considered a 
                                                 substitute for our results as prepared in accordance with GAAP. The 
                                                 reconciliation of EBT and EPS on a GAAP basis to the EBT and EPS 
                                                 excluding the impacts of the items discussed has been provided in our 
                                                 earnings release, which is available on our investor Web site and will be 
                                                 furnished with the SEC on Form 8-K. 
 
                                                 Speaking on this call are Phil Schoonover, Chairman, President and Chief 
                                                 Executive Officer, Bruce Besanko, Executive Vice President and Chief 
                                                 Financial Officer, and John Harlow, Executive Vice President and Chief 
                                                 Operating Officer. 
 
                                                 Also available during the question-and-answer session will be Jeff Stone, 
                                                 Executive Vice President, New Business Development, and John Kelly, 
                                                 Senior Vice President and Chief Merchandising Officer. 
 
                                                 And with that, I’ll turn the call over to Phil. 
 
Philip Schoonover:              Thanks, Bill, and good morning to all. 
 
                                                 Today I’ll discuss our fourth quarter results, update you on the progress we’re 
                                                 making on our turnaround plans, update you on InterTAN, outline our key 
                                                 priorities that position us for profitability in the longer term, and talk about 
                                                 how we’ve built a senior management team dedicated to execution and 
                                                 accountability. 
 
                                                 Financially, fiscal year 2008 was a very disappointing year. The fourth 
                                                 quarter, however, showed some progress, and we expect continued 
                                                 improvement from our turnaround strategies in fiscal year 2009. We remain 
                                                 confident that we are on the right track. We are implementing the right 
                                                 strategies with the right talent and processes to lead us to a successful 
                                                 turnaround and position us for long term profitable growth.
 
                                                 As Bruce will highlight, our first quarter expectations are below last year. We 
                                                 believe that we have appropriately reflected conservatism regarding the 
                                                 economy in our sales and earnings guidance. We do not expect to see year- 
                                                 over-year improvements in the performance until the back half of this year. 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 3

                                                 That said, we do expect our full year results to reflect improvement over fiscal 
                                                 2008. We believe our guidance is realistic and achievable, and we have the 
                                                 resources, both financially and with the talent in our organization, to effect a 
                                                 positive turnaround in our business. 
 
                                                 With that, let’s begin a review of the quarter. We are pleased that our fourth 
                                                 quarter operating results were better than expected. Our sales and gross 
                                                 margin results were approximately within line of our guidance. We managed 
                                                 our expenses better than planned. While our sales and gross margin 
                                                 performance are still not what they need to be, we are making progress on our 
                                                 key goals that are expected to result in improved gross profit and lower 
                                                 expenses as well as provide us with a platform for sustainable growth. 
 
                                                 During the fourth quarter, we slowed the pace of change in our stores and 
                                                 focused on execution, customer service, and rebuilding our selling culture. 
                                                 This enabled our associates in the stores and at the store support center time to 
                                                 digest the store level changes and better understand and respond to how they 
                                                 would impact the business day-to-day. We mentioned in the third quarter call 
                                                 that we have seen some stabilization in close rate and TV basket trends. By 
                                                 the fourth quarter, our transformation activities were complete and at scale. 
                                                 We saw examples of where both selling culture and customer service are 
                                                 showing signs of improvement. 
 
                                                 Let me provide you with some specifics. Our store close rates improved Q4 
                                                 compared with Q3. The rate was still below last year, but the gap narrowed. 
                                                 We measured how often we attach high margin accessories and services to 
                                                 hardware units that we sell, and we are also seeing progress here. 
 
                                                 Here are three examples. Our PC services attachment rate has been on a clear 
                                                 upward trend from the end of Q2 through Q4. Our home theater installation 
                                                 attachment rate rose above last year’s rate in December and January. Finally, 
                                                 we’re showing improvement since November 2007 in our warranty unit 
                                                 attachments. While we have lowered our warranty prices to be a better 
                                                 customer value, we are attaching a warranty at a higher rate. We have 
                                                 actually pulled above last year in TV warranty units. 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 4

                                                 We measure the total basket size of accessories and services that is attached to 
                                                 a common hardware purchase. We see the gap between last year and this year 
                                                 narrowing virtually every category, and many categories are showing 
                                                 improved sequential trends. Keep in mind that declining prices would 
                                                 naturally put downward pressure on the size of these baskets, and so any 
                                                 increase shows that we are improving our selling culture. 
 
                                                 Turning to customer service. A recent survey by University of Michigan’s 
                                                 American Customer Satisfaction Index noted that our ratings improved in 
                                                 2007 compared to 2006. In fact, we’ve narrowed the gap to three points from 
                                                 our largest primary competitor. 
 
                                                 We’ve commissioned the third parties that mystery shop our stores to measure 
                                                 our sales associates’ behaviors in key areas, such as greeting. We’ve seen a 
                                                 10 percent increase in the effectiveness from July 2007 through March 2008 
                                                 in home entertainment. 
 
                                                 Admittedly, we have much further to go in improving customer service in our 
                                                 stores, and John will speak more about what we’re doing in just a moment. 
                                                 While we’re pleased to see stability return and some modest improvements to 
                                                 trends, we recognize that we must significantly upgrade our ability to execute 
                                                 across the company. Let me be clear that our primary focus is now store level 
                                                 execution. 
 
                                                 Turning to our long-term strategic plans. We have made steady progress 
                                                 towards our four strategic growth pillars and our key goals. 
 
                                                 First, in home entertainment. This business continues to be a key 
                                                 underpinning of our strategy. Growth rates for large LCD televisions remain 
                                                 strong as we continue to see sales of tube and projection televisions diminish. 
                                                 Our opportunity is not only to help our customers upgrade to flat and digital, 
                                                 but to bring the entire high definition experience alive in their homes through 
                                                 digital source, theater-like audio, and post sales support, including firedog 
                                                 installation services, as well as Circuit City advantage product protection 
                                                 plans. Our baskets for flat panel televisions improved 10 percent in the fourth 
                                                 quarter compared with the third quarter. 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
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                                                 Second, multi-channel. Direct sales grew 14 percent this quarter. Our fiscal 
                                                 year 2008 growth was a strong 21 percent to $1,35 billion. Over half of this 
                                                 product was picked up in our stores. We continue to focus on strategies that 
                                                 provide enhanced shopping capabilities for online customers and further 
                                                 integrate all of our shopping channels. 
 
                                                 Third, firedog services. PC services and home theater installations grew 11 
                                                 percent in the fourth quarter. We believe our services growth will improve as 
                                                 we further refine our stores’ focus back to selling attachments. As I 
                                                 mentioned earlier, we have been seeing encouraging trends in our firedog 
                                                 attach rates. 
 
                                                 Turning to our real estate. We completed 26 domestic superstore openings 
                                                 and relocations in the quarter, which resulted in meeting our annual goal of 61 
                                                 new and relocated superstore openings for the fiscal year. We had 22 of the 
                                                 City stores at year end including one remodel of a super store into the City 
                                                 format. In the case of the remodel, we had a store that was about 30,000 
                                                 square feet, and we reduced our space to 20,000 and separated the other 
                                                 10,000 out for sublet. We will monitor the results of this to see if we have an 
                                                 opportunity to do more of these remodels in the future. 
 
                                                 We continue to be encouraged by customer feedback on this format. In fiscal 
                                                 year 2009, we will continue to refine the model in its own right as well as 
                                                 develop what I call look-back strategies to take the key things that we’re 
                                                 learning from the City back to our core stores and improve the customer 
                                                 experience and financial performance. 
 
                                                 We exceeded our goal to take $150 million out of SG&A, and we achieved 
                                                 our net owned inventory reduction goal of more than $100 million. 
 
                                                 Now turning to InterTAN. We continue to explore strategic options for our 
                                                 international segment, InterTAN. At this point in the process, our board has 
                                                 not yet determined the best course of action. The team in Canada has done a 
                                                 great job of executing on their transformation activities and it’s hitting 
                                                 financial targets that we have set. Despite some slowdown in the Canadian 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 6

                                                 economy, the business is better positioned and should show further 
                                                 improvement into the future. 
 
                                                 Let me now provide some high level thoughts about fiscal year 2009. 
 
                                                 Our top priority is to crisply execute the retail recovery plan and rebuild our 
                                                 selling culture. The outcomes of this will be improving our gross margin rate 
                                                 through merchandising, marketing and pricing discipline, managing our 
                                                 expenses through maintaining an intense focus on controlling SG&A, driving 
                                                 our close rate and attachments by rebuilding our customer service and selling 
                                                 culture, which improves both sales and margins, growing our sales of firedog 
                                                 services and our direct channel businesses and, finally, growing through 
                                                 relocating, remodeling and selectively opening new stores. 
 
                                                 We remain committed to a strategy that leads us to improved sales and 
                                                 financial results, both in the near term and the long term, and look forward to 
                                                 updating you on the progress in the months ahead. 
 
                                                 Let me speak to you now about our leadership team. 
 
                                                 In fiscal year 2008, we added three high caliber leaders to our team and 
                                                 expanded John Kelly’s role to be our chief merchant, and I believe that these 
                                                 individuals bring a fresh approach. As seasoned executives with significant 
                                                 retail turnaround experience, they are charged with driving the execution of 
                                                 our initiatives, providing training and leadership development to our 
                                                 associates, and holding the teams accountable to deliver improved results in 
                                                 the next phase of our turnaround. 
 
                                                 Earlier this year, Bruce Besanko joined our team. I know many of you have 
                                                 met or spoken to him since he’s joined in late July. Bruce brings retail 
                                                 experience, focus and sound financial discipline, coupled with proactive 
                                                 strategic planning to our financial team. 
 
                                                 John Harlow joined the company as chief operating officer overseeing retail, 
                                                 real estate, information technology and our supply chain. He was most 
                                                 recently a consultant with Deloitte specializing in retail. He previously had 
                                                 senior leadership roles in turnarounds at A&P and Toys ‘R’ Us. 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 7

                                                 Jeff Stone joined the company as head of new business development, which 
                                                 for us specifically refers to firedog services, our new the City store concept, 
                                                 and other innovation work. Jeff has proven retail and operational leadership 
                                                 as the former chief operating officer and then the chief executive officer of 
                                                 Tweeter Home Entertainment, Inc. during their expansion years, as well as 
                                                 other high-end specialty retailing experience. 
 
                                                 Now, I’d like to give you the opportunity to hear from John Harlow about his 
                                                 initial focus, and now let me turn the call over to John. 
 
John Harlow:                      Thanks, Phil, and good morning, everyone. 
 
                                                 I joined Circuit City 79 days ago. My first 30 days were spent identifying and 
                                                 prioritizing the key initiatives that will drive retail execution and rebuild the 
                                                 customer service and selling culture in our stores. The next 30 days were 
                                                 focused on meeting with all district and store directors in their markets to 
                                                 communicate the company’s fiscal 2009 priorities and work through each 
                                                 store’s plan to execute against those priorities. 
 
                                                 Let me share my initial observations and input from our stores. First, we can 
                                                 meaningfully improve our overall level of in-store execution and 
                                                 performance. Second, we need to better integrate our approach between retail 
                                                 operators and the store support center in order to further improve the customer 
                                                 shopping experience. Third, enhancements to our store execution and better 
                                                 alignment between store support center and supply chain support the up side 
                                                 that is planned to fiscal 2009. To win, we have to deliver the basics well and 
                                                 consistently. To this end, we have only one agenda, to provide a renewed 
                                                 customer experience to our customers. 
 
                                                 What does that mean? First, to build trust, traffic and top line across our 
                                                 organization, we are developing a team of associates dedicated to providing 
                                                 the appropriate balance of customer service and solution selling. Next, we are 
                                                 upgrading our merchandise presentation standards to support an improved 
                                                 customer experience while fostering a healthier customer journey. 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 8

                                                 Our team has planned a workload to insure our stores have the right tools and 
                                                 resources to complete their selling, merchandising and operating objectives. 
                                                 Overall, our renewed experience will be focused on exceeding the product and 
                                                 service needs of our customer. Our plan includes upgrading visual and store 
                                                 décor to facilitate customer choices and convenience. We will continue to 
                                                 better integrate retail sales plans with merchandising, marketing and supply 
                                                 chain to insure consistency across all stores. 
 
                                                 Finally, it means that we are committed to helping our customers find the 
                                                 right solutions for their needs. We have deployed staffing and service 
                                                 standards to support greeting our customers quickly and providing friendly 
                                                 service. We are providing more effective training for all of our associates, 
                                                 including training from some of our best-in-class vendor partners. We are 
                                                 focusing support from our field leadership team through more coaching, better 
                                                 priority setting, and requisite accountability to achieve our results. The fiscal 
                                                 2009 plan is both top down and bottoms up. Goals have been established that 
                                                 foster both ownership and accountability. 
 
                                                 How will we do this? Through an holistic approach and intense focus to 
                                                 rebuilding our selling culture, which includes staffing changes, selection of 
                                                 the team, training and compensation that aligns to our goals. Execution plans 
                                                 are in place to drive growth in home entertainment by re-dedicating 
                                                 specialized highly-trained associates to this critical area during an important 
                                                 digital conversion year. We’re focusing on fewer priorities this year to create 
                                                 less distraction so that we can replicate a greatly renewed customer 
                                                 experience across all our store categories. 
 
                                                 Organizationally, this year is about delivering a renewed customer experience. 
                                                 We will not introduce significant changes for our stores. As part of focusing 
                                                 our efforts, we have made the decision to slow the deployment of our retail 
                                                 point-of-sale systems. A more deliberate rollout will insure the point-of-sale 
                                                 conversion is effective, thereby minimizing disruption to the stores and will 
                                                 provide the sales team the time to rebuild customer relationships. 
 
                                                 In summary, we will deliver an improved in-store customer experience that 
                                                 supports significantly improved financial performance. I am confident that 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 9

                                                 we will start to see traction on our execution initiatives in the first half of this 
                                                 year, with more visible financial contribution in the second half. 
 
                                                 Now I’d like to turn the call over to Bruce Besanko. 
 
Bruce Besanko:                     Thanks, John. Good morning, everyone. 
 
                                                 I’d like to cover three areas. First, I will review our fourth quarter financial 
                                                 performance, including analysis of the trends we saw in the quarter. Second, 
                                                 I’ll share some of our financial plans for fiscal ’09, and finally, I’ll update you 
                                                 regarding the ongoing evaluation of real estate. 
 
                                                 Let me begin with a review of the financial performance for the fourth 
                                                 quarter, starting first with the income statement. Net sales decreased 7.7 
                                                 percent to $3.65 billion. Domestic segment sales declined 8.8 percent to 
                                                 $3.45 billion. The domestic sales decline was primarily driven by our comp 
                                                 store sales decline of 11.3 percent, which compares to our comp store sales 
                                                 decrease of 0.5 percent in last year’s fourth quarter. 
 
                                                 Let me provide more color around domestic sales trends. From a product 
                                                 perspective, by far the largest contributor to our sales performance is large 
                                                 LCD televisions. GTX video gaming products and services installations also 
                                                 contributed. Our weakest categories included projection tube and plasma TVs 
                                                 as the consumer shifts sales focus to large LCDs, which is a trend that we’ve 
                                                 been seeing across the industry. 
 
                                                 We saw continued weakness across all regions of the country, though the 
                                                 strongest declines were felt in Florida and California. The northeast had a 
                                                 lower comp decline than the other regions. 
 
                                                 As it relates to traffic, ticket and close, because there’s a lot of seasonality to 
                                                 these metrics, we evaluate them on a monthly and quarterly basis as a 
                                                 percentage to last year. I’ll speak first about our store metrics. Average ticket 
                                                 continues to be the bright spot. Our Q4 average ticket increased by low single 
                                                 digits compared to the prior year. This is similar to the trend seen in Q3. Q4 
                                                 traffic declined sharply from last year, and the year-over-year decline widened 
                                                 from Q3. 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
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                                                 Trend lines, we saw a sharp decline in the time period from September 
                                                 through December. The trend plateaued or flattened out in January and 
                                                 February. We believe these trends are driven by the macro conditions as well 
                                                 as decline in packaged media. We’ll be watching our traffic close trends 
                                                 closely. Improving in-store experiences will drive loyalty which will drive 
                                                 frequency and improved traffic. 
 
                                                 Close rate was down compared to the prior year, but encouragingly, Q4 was 
                                                 improved over Q3. Close rate is obviously one of the many key metrics to 
                                                 measure execution and one we’re intensely focusing on. For Circuit City 
                                                 Direct, increased traffic continues to be the primary driver of our strong sales 
                                                 results. Average ticket declined slightly on a year-over-year basis for the 
                                                 quarter. 
 
                                                 Turning to our international segment, sales increased 17.4 percent, primarily 
                                                 reflecting the favorable impact of foreign exchange rates and a comparable 
                                                 store sales increase of 8.6 percent in local currency, partially offset by the 
                                                 impact of 27 net store closings in the last year. 
 
                                                 Consolidated gross profit margin declined by 329 basis points from last year. 
                                                 The domestic segment gross margin declined 394 basis points. The decrease 
                                                 was driven by a decrease in product margins, an increase in shrinkage, and a 
                                                 decrease in extended warranty net sales. International segment gross profit 
                                                 margin increased 719 basis points. Some of the improvements relate to 
                                                 charges we took last fiscal year associated with store closures and product line 
                                                 exits. The improvement also resulted from fewer markdowns. 
 
                                                 Let me talk for a moment about the gross margin decline. We know this is not 
                                                 acceptable and have a number of initiatives underway, led by both our chief 
                                                 merchant, John Kelly, and our COO, John Harlow, to deliver store-level 
                                                 improvements in fiscal 2009. 
 
                                                 These initiatives include the following. First, rebuilding our customer service 
                                                 and selling culture in our stores to improve the attachment of higher margin 
                                                 accessories, firedog services and Circuit City advantage protection plans. We 
                                                 have several very specific initiatives we’re testing to bring back the selling 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
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                                                 culture. Second, reducing shrinkage through targeted controls and improved 
                                                 staffing to return results to historical levels. Third, improving our execution 
                                                 of product transitions to reduce markdowns. Fourth, optimizing our 
                                                 assortments, markdowns and pricing policies and ad effectiveness to improve 
                                                 our gross margin. And finally, increasing our direct sourcing efforts to lower 
                                                 our cost of goods on less brand sensitive products. Some of these initiatives 
                                                 have already begun, while others will take time to bear results. 
 
                                                 Consolidated SG&A expenses as a percentage of sales decreased by 98 basis 
                                                 points. The domestic segments expense to sales ratio decreased 65 basis 
                                                 points compared with last year. The decrease primarily reflects an 87 basis 
                                                 point decrease in expenses associated with store and facility closures and 
                                                 other restructuring activities, and a 49 basis point decrease in compensation 
                                                 costs that resulted primarily from the company’s expense reduction initiatives. 
                                                 The decreases were partially offset by the overall de-leveraging impact of 
                                                 lower sales and 121 basis point increase in expenses related to incremental 
                                                 and relocated stores. 
 
                                                 International segments fourth quarter SG&A expense to sales ratio decreased 
                                                 significantly due to store closures and severance expenses that occurred last 
                                                 year but didn’t repeat this year, as well as the overall leveraging impact of 
                                                 higher sales. 
 
                                                 We exceeded our goal to take $150 million out of SG&A expenses this year 
                                                 and actually took out approximately $200 million. We achieved greater than 
                                                 expected savings in non-store head count and indirect spend, which is made 
                                                 up principally from not-for-resale goods and services. During the year, we 
                                                 reinvested a portion of these savings into initiatives to improve our business 
                                                 and prepare for future growth, including opening new store costs and 
                                                 investments in information technology. 
 
                                                 Also during the quarter, the company recorded a non-cash impairment charge 
                                                 of $26 million related to the goodwill associated with the international 
                                                 segment. The carrying costs of the segment has increased as the value of the 
                                                 Canadian dollar has strengthened and, in addition, a market-wide decline in 
                                                 valuations led to the impairment charge. The non-cash impairment charge is 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
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                                                 not deductible for tax purposes. The segment’s performance has improved 
                                                 significantly and was not a factor in the impairment. 
 
                                                 For the quarter, we have consolidated loss from continuing operations before 
                                                 taxes of $2.7 million compared to earnings from continuing operations before 
                                                 taxes of $27.1 million in the prior year. Excluding the impairment for 
                                                 goodwill, for the quarter we had a consolidated earnings from continuing 
                                                 operations before taxes, as adjusted, of $23.3 million compared to earnings 
                                                 from continuing operations before taxes of $119 million in the prior year. 
 
                                                 The net results for the fourth quarter was earnings from continuing operations 
                                                 of 3 cents per share compared with a net loss from continuing operations of 4 
                                                 cents per share last year. Excluding the impairment for goodwill, as well as 
                                                 the tax valuation allowance, the net result for the fourth quarter was earnings 
                                                 from continuing operations, as adjusted, of 10 cents per share compared with 
                                                 a net earnings from continuing operations, as adjusted, of 49 cents per share 
                                                 last year. 
 
                                                 Turning to the balance sheet. Between our current cash balance and the 
                                                 funding available to us through the amended credit facility, we believe we 
                                                 have sufficient liquidity to sustain our multi-quarter turnaround plan. Cash, 
                                                 cash equivalents and short term investments were $297 million at year end. 
                                                 As compared to the end of last year, the balance declined by $442 million, 
                                                 principally driven by purchases of PP&E and stock repurchases and dividend 
                                                 payments as well as cash used in our operating activities. 
 
                                                 During the fourth quarter, we closed our amended credit facility transaction. 
                                                 As a reminder, the facility has an initial term of five years and carries no 
                                                 financial covenants. 
 
                                                 We’ve received some questions about option-based securities. While we’ve 
                                                 invested in these before, we successfully liquidated our position during the 
                                                 fourth quarter and did not reinvest in them. 
 
                                                 To make one further point about our liquidity, as of April 8th, with the 
                                                 exception of approximately $50 million in letters of credit for our direct 
                                                 sourcing activities, we have not borrowed under our credit agreement. 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
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                                                 Despite the expected loss in the first half of fiscal 2009, we believe we have 
                                                 ample liquidity to get through that period, and then to support our peak 
                                                 borrowings just ahead of the holiday season. 
 
                                                 In addition to the availability under the asset-backed facility, we expect to 
                                                 generate approximately 80 million in cash from a tax refund in the third 
                                                 quarter. 
 
                                                 And finally, with respect to InterTAN, while the board has not determined a 
                                                 course of action, a sale of the InterTAN could add to our cash balances if 
                                                 closed this year. 
 
                                                 Consolidated merchandise inventories at year end declined 4 percent from last 
                                                 year, even including the addition of 40 net new superstores. We achieved our 
                                                 net-owned inventory reduction goal of 100 million in the domestic segment, 
                                                 coming in with our expected range despite our disappointing sales 
                                                 performance for the year. We did this through increasing our mix of healthy 
                                                 inventory and focusing on in-stocks for our most important and productive 
                                                 SKUs. We still have room to improve our in-stocks and inventory health and 
                                                 have targeted further net-owned inventory reductions for fiscal ’09. 
 
                                                 As I think about fiscal ’09, let me share with you our finance and financial 
                                                 guiding principles. We’ll focus on maximizing earnings before taxes, 
                                                 generating positive cash flow, keeping investments focused with an increased 
                                                 ROIC hurdle rate to support our growth, and maintain a heightened 
                                                 governance over capital, SG&A and head count. 
 
                                                 We walked through our fiscal ’09 expectations in this morning’s press release. 
                                                 We expect to deliver an improvement in pre-tax loss of 50 to 100 basis points 
                                                 compared with fiscal ’08. As a reminder, the domestic segment will incur no 
                                                 tax expense or benefit in fiscal ’09 due to the company’s multi-quarter losses. 
 
                                                 While we expect continued sequential improvement in our operating metrics, 
                                                 we do not expect a year-over-year improvement until the second half of fiscal 
                                                 2009. Based on the current environment and current business trends, we 
                                                 expect a Q1 loss of $180 to $195 million, and a Q2 loss before tax greater 

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                                                 than fiscal 2008’s level. We expect year-over-year improvement in loss 
                                                 before tax in Q3, and improvement in earnings before tax in Q4. 
 
                                                 The improved outlook for the second half of the year is based on the 
                                                 seasonality of the business as well as the expectations that our turnaround and 
                                                 store operating initiatives will have a more meaningful and positive impact on 
                                                 the business, having had more time to take effect. We’ll also anniversary the 
                                                 disruption created from the implementation of these strategies last year. 
 
                                                 Longer term, we believe our strategies position us for profitability and 
                                                 sustained growth. 
 
                                                 Finally, I wanted to bring you up to speed on the review of real estate, our 
                                                 preliminary filings and the near term actions we’ve taken. First, we’ve 
                                                 refined our real estate strategy to demand higher returns and have increased 
                                                 our hurdle rate for approving sites. This has resulted in shifting our strategic 
                                                 focus from aggressively expanding the store base to instead renewing our base 
                                                 through relocations, remodels and other creative solutions, which better suits 
                                                 our current performance. These changes will be reflected in our pipeline for 
                                                 future year openings. 
 
                                                 We’ve worked with landlords to delay or cancel the least attractive deals in 
                                                 our pipeline, in line with our near-term strategy. This, in conjunction with 
                                                 current trends in commercial real estate development, have resulted in 
                                                 reducing our fiscal ’09 planned openings by about half. 
 
                                                 Next, we’ve completed an initial analysis of the existing base and prioritized 
                                                 the store clusters where we can extract the greatest value by relocating, 
                                                 remodeling or closing, that is, stores near the end of their life, the largest 
                                                 stores and the oldest stores. 
 
                                                 This analysis has been more complex than we’d originally expected, and it’s 
                                                 yielded some surprising results. While our older stores may under perform in 
                                                 sales per square foot, they benefit from lower rents, and on average are 
                                                 economically – as economically productive as newer 30K sites on a four-wall, 
                                                 non-allocated EBIT percent and EBITDA percentage basis. On a trailing 12- 
                                                 month basis, nearly all of our stores remain four-wall EBITDA positive and 

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                                                 are more profitable to operate at current performance levels than to close. 
                                                 Advertising expenses were not allocated to stores except in single store 
                                                 markets. 
 
                                                 We did similar data cuts based on market, store format and other views, and 
                                                 concluded there was no obvious class of stores that would make sense to 
                                                 target for closure at this time because of our focus on maintaining sources of 
                                                 cash. Given our level of execution last year, we believe the contribution of 
                                                 most of these stores can and will improve. That being said, we’ll continue to 
                                                 evaluate stores for potential closure and will be willing to make the decision 
                                                 should it be accretive to our financial condition. 
 
                                                 Longer term, revitalizing our store base remains our strategy because we 
                                                 simply will not win without improving the store environment for our 
                                                 customers and our associates. 
 
                                                 We can confirm that on average we have seen substantially better results from 
                                                 our 20K store format. We evaluate the stores opened more than 13 months 
                                                 ago to insure we’re evaluating a full year of actual performance. Both in sales 
                                                 performance per square foot and four-wall non-allocated EBIT percent, on 
                                                 average the 20K stores outperformed the older 30K formats, all this despite 
                                                 the fact they’re in trade areas with projected CE sales about half the chain 
                                                 average. They provide a much more attractive option for upgrading the store 
                                                 base. 
 
                                                 And finally, we’re excited about the potential of the new City format for 20K 
                                                 stores. While no store has been opened for a full year to compare it apples to 
                                                 apples with other 20K stores, the customer associate feedback has been 
                                                 positive. 
 
                                                 Our 45 to 55 fiscal 2009 store openings and relocations will virtually all be 
                                                 the City format. We believe we can evolve this concept over time into a step 
                                                 change performance for the company. 
 
                                                 Now I’d like to turn the call back to Phil for his closing remarks. 
 
Philip Schoonover:              Thanks, Bruce. 

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                                                 In closing, fiscal year 2008 represented a year of fundamental repositioning at 
                                                 Circuit City. We changed our business practices and introduced an innovative 
                                                 new store concept. 
 
                                                 While the amount of change was disruptive in the short term, we are now in a 
                                                 position to improve execution and customer service. As a result, we expect to 
                                                 become a stronger more effective company during the current year with an 
                                                 intense focus on retail execution. 
 
                                                 At the same time, we are continuing to support our future expansion by 
                                                 growing higher margin sales, differentiating our stores, and improving our 
                                                 store experience. 
 
                                                 Our associates have embraced the changes and the entire Circuit City team is 
                                                 committed to the strategies that are expected to generate long-term 
                                                 profitability and sustained growth. 
 
                                                 Now Bill will cover some of the ground rules before we take the next 
                                                 question. 
 
Bill Cimino:                        Thanks, Phil. 
 
                                                 Our call today is running a little bit long, but we want to try to get to you as 
                                                 many analysts as we can on the call, so if you could limit yourselves to one 
                                                 question and a follow-up, it would be much appreciated. 
 
                                                 Second, I know that some of you may have some questions about one of our 
                                                 large investors, Wattles Capital Management. As you know, we have 
                                                 received notice from Wattles Capital Management that it intends to nominate 
                                                 five directors for election to our board at the 2008 annual meeting of 
                                                 shareholders. Wattles Capital Management has also submitted two other 
                                                 proposals. 
 
                                                 Our board will consider these proposals and the qualifications of the Wattles 
                                                 Capital Management nominees in accordance with its fiduciary duties. 

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                                                 While there certainly will come a time when it is appropriate for the company 
                                                 to discuss its views and any potential actions that it may take in response to 
                                                 the Wattles Capital Management proposals and nominees, our focus today is 
                                                 on the company’s fiscal year ’08 results and fiscal ’09 plans and strategies. 
                                                 As such, we will not entertain any questions that relate to Wattles Capital 
                                                 Management or Mr. Wattles today. We appreciate your cooperation with both 
                                                 these requests. 
 
                                                 With that, I’d like to open the call to your questions. Operator? 
 
Operator:                   At this time, I would like to remind everyone, in order to ask a question, 
                                                 please press star then the number one on your telephone keypad. If you would 
                                                 like to withdraw your question, press the pound key. We’ll pause for just a 
                                                 moment to compile the Q&A roster. 
 
                                                 Your first question comes from the line of Mitch Kaiser with Piper Jaffray. 
 
Mitch Kaiser:                   Guys, good morning. First, maybe for you, on the guidance, if you look at 
                                                 roughly flat sales for the year and you’re calling for mid-single-digit dollar 
                                                 growth on SG&A, to me it looks like you de-leveraged SG&A about 100 to 
                                                 110 basis points, and given kind of what you’ve guided for Q1 and Q2, so if 
                                                 I’d look at what the back half assumption is, particularly for gross margin, on 
                                                 my model, I’m getting numbers around the range of 320 to 350 basis points. 
 
                                                 Could you validate that my thinking’s right on that, and then maybe talk about 
                                                 some of the drivers behind that? 
 
                                                 Thank you. 
 
Bruce Besanko:                    Yes, this is Bruce. Let me see if I can add some color for you, and then 
                                                 obviously we’re available after the call if you want to – if you need some 
                                                 assistance in building out your model. 
 
                                                 So, as you know, the economy is tough and it’s not – it’s certainly not helping 
                                                 anyone at this point. We’ve assumed a recession in the first half of the year 
                                                 and a soft economy in the second half. Those assumptions are embedded in 
                                                 our outlook. 

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                                                 In terms of SG&A, we’ve been able to take out a significant amount of SG&A 
                                                 this year. We would expect as we continue to intensely focus on SG&A over 
                                                 the course of this next year that we would be able to continue to make 
                                                 progress in terms of SG&A. 
 
                                                 That said, we can’t – we have done about as much in terms of cost takeout as 
                                                 we feel is prudent at this point. Our issue now is really about driving 
                                                 profitable growth and increasing gross margins for better execution. 
 
                                                 And specifically around gross margin, and I’ll let John Kelly add to this here 
                                                 in just a moment, we think that there is a significant opportunity in terms of 
                                                 growing gross margin as we begin to achieve traction over the course of this 
                                                 year. So we are intensely focused on improving our HE basket, and we’re 
                                                 going to continue the growth and focus on growing our higher margin firedog 
                                                 services, and we’re going to enhance our disciplines around shrink pricing and 
                                                 markdowns, and with those efforts, I think we’ll begin to see some traction 
                                                 around margin. 
 
John Kelly:                   I think also – this is John. I think we’ll also see some traction, as John 
                                                 Harlow spoke earlier on rebuilding the selling culture and being able to up sell 
                                                 some of the better products and better brands that we have strategy for, for 
                                                 this year, and that’ll increase our gross profit dollars also. 
 
Bill Cimino:                   Thanks, John. 
 
Mitch Kaiser:                   OK. OK. So, I guess the biggest driver behind the gross margin in the back 
                                                 half is the improved customer experience, and is it valid that, you know, 
                                                 roughly my math on the gross margin, does that seem roughly right? 
 
Bruce Besanko:                   It seems a little high, but we can work with you after the call. 
 
Mitch Kaiser:                   OK. OK. Thank you. 
 
Bill Cimino:                   Thanks, operator. We’re ready for the next caller, please. 
 
Operator:                   Your next question comes from the line of Dan Binder with Jefferies. 

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Dan Binder:                     Binder. Nobody gets it right, so. 
 
                                                 Just a couple questions for you. I’m just trying to reconcile a couple of 
                                                 things. As I think about the SOPs that you rolled out last year, it seemed like 
                                                 there was some stickiness issues you were having there, and at the same time 
                                                 you’ve been cutting costs and now we’re hearing about new training that’s 
                                                 going to be occurring and improving the selling culture. 
 
                                                 I’m just curious, after having rolled out those SOPs, what went right, what 
                                                 went wrong, why is the selling culture still not quite where you want it to be, 
                                                 and then how do you sustain these expense cuts when perhaps you need to put 
                                                 a little bit more money back into training and the selling culture, broadly 
                                                 speaking? 
 
John Harlow:                     Hi, Dan. John Harlow. Let me talk to that a little bit. 
 
                                                 The work that was done last year created a very strong foundation and 
                                                 framework for the stores to execute against. What we’ve done in the past few 
                                                 months is refine that framework on a per-store, per-market basis. 
 
                                                 I actually just spend the last 60 days working literally with every store 
                                                 director, district manager and regional VP to refine the framework so that it 
                                                 works not only at a local level and at a store level to deliver the SOP piece of 
                                                 it, but it’s really then taking the development of the selling culture up one 
                                                 notch. It’s not – we’re not trying to go all the way from A to Z. 
 
                                                 If you think about the destruction that we had last year in our business, you’re 
                                                 implementing a change. That took our eye off the ball, but at the end of the 
                                                 day it was positive because it gave us a framework, and the last 60 days have 
                                                 been really spent refining the SOPs that give us the ability to deliver and sell, 
                                                 and the time that’s been freed up has allowed us to implement training 
                                                 programs to take selling and servicing our customer to a different level. 
 
                                                 Do we get there in 30 days? No, but I think you will see improving 
                                                 engagement across our chain, and I actually saw that not only the engagement 
                                                 but the focus level was embraced by every store director in our company 

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                                                 because they’re now personalizing a plan that we a framework put in place 
                                                 last year. 
 
John Kelly:                     And this is John. Also, adding to what John has to say, as the selling culture 
                                                 evolves, it’ll reduce our dependency on opening price point product. We’ll be 
                                                 able to sell better, higher margin product that’ll enhance the margin rate there. 
 
                                                 So one of the things that we lost last year because of lack of training or lack of 
                                                 selling expertise was the ability to up sell product, and to attach on the basket. 
 
                                                 Now, as John goes around and has these trainings continue, you’re starting to 
                                                 see improvement on all these fronts. 
 
Bill Cimino:                     And that was John Harlow and then John Kelly. 
 
Dan Binder:                     And this just is a follow-up. Following the separations of store employees last 
                                                 year, I was under the impression that the store level associates perhaps that 
                                                 were trying to deal with all these SOP changes were less tenured and therefore 
                                                 the whole process was more challenging. I’m just kind of curious how you 
                                                 feel about the level of experience and the ability to take these current 
                                                 associates up the ladder in terms of implementing this better selling culture, 
                                                 and then also you’ve mentioned shrink a number of couple – a number of 
                                                 times in your conversations today and the press release and the call. Is this, 
                                                 was that a bigger issue than you expected in the quarter, and how much do 
                                                 you think it was worth on the margin? 
 
John Harlow:                     Let me try to address some of that. I have to tell you, the level of the focus 
                                                 and clarity that this year’s operating plan gives the stores, gives them – first of 
                                                 all, it makes it easier for even a new employee to be much more focused on 
                                                 delivering not only great merchandise presentation but the basics of selling 
                                                 and servicing our customer. 
 
                                                 The second piece of that is that even though there are some people who are 
                                                 less tenured, they are now anniversaring the work that was done last year and 
                                                 now they’re in their second year, continuing to build their performance and 
                                                 engagement with the customer and the familiarity with the products and 
                                                 services that we sell, and quite frankly, the simplification of the management 

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                                                 and supervisory roles in our stores will help give them the support they need 
                                                 to take their execution to another level. 
 
                                                 If you partner that with vendor training, these are not new external initiatives. 
                                                 This is actually part of how we will do business on a go-forward basis. These 
                                                 are not being introduced as new initiatives. This is how we build the 
                                                 execution plans so that people are comfortable merchandising the stores in a 
                                                 way that the customer can shop, buy and enjoy, and frankly give them the 
                                                 tools to sell more effectively to build the relationship back with our customer 
                                                 and also build the basket in our business. 
 
                                                 As it relates to the shrink piece, the supervisory focus and the structure that’s 
                                                 been put in place on a per-store basis gives us the precision, the operational 
                                                 excellence to be able to move the needle on the shrink slippage that we had 
                                                 last year by introducing the massive changes that were out there. So I think 
                                                 the clarity, the performance management and the raw focus that we have this 
                                                 year gives us a distinct advantage over the amount of complexity that last year 
                                                 experienced. 
 
Bill Cimino:                   Great. Thanks, Dan, and, Operator, we're ready for the next call please. 
 
Operator:                 And your next question comes from the line of Joe Feldman with Telsey 
                                                 Advisory Group. 
 
Joe Feldman:                 The question, a number of times on the call, you used the term rebuilding the 
                                                 selling and service culture. And I guess I wanted a little more detail on how 
                                                 exactly you do that? It sort of follows on Dan's question, do you have the 
                                                 right people in place to do it? How long does it take? I mean, it's clearly not 
                                                 a one-year thing and it's something that was started a year ago, so how 
                                                 meaningful will this be as an impact for the second half of this year? 
 
Phil Schoonover:                 This is Phil speaking here. I just want to remind everybody that this has been 
                                                 a journey. When we had a permanent change to the television business, 
                                                 televisions represent roughly half of our total revenue and a similar portion of 
                                                 our products, we had to change the business model. And the initial SOP work 
                                                 was really aimed at putting standard practices in the store to free up people to 
                                                 serve our customers. That has to be a phased approach. We had to re- 

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                                                 engineer the processes, we had to implement those new policies and then we 
                                                 had the freeing up of the labor, so people could refocus their effort on serving 
                                                 the customer. 
 
                                                 I think that you have to look at this in terms of a journey. It’s taken longer 
                                                 than we expected and it was more difficult than we expected, but we have 
                                                 fundamentally changed the way we run the stores. And with that said, I'll 
                                                 have John talk about now why the big emphasis on rebuilding the customer 
                                                 service culture. 
 
John Harlow:                      If you think about the things that we would say got in our way last year, in 
                                                 terms of the massive amount of change, it hurt our ability to focus. So what 
                                                 we're doing this year is a couple of things. One, we have great insights from 
                                                 our customer about what they think we need to deliver to rebuild the services 
                                                 and the culture that they'd like to see and the shopping experience in our store. 
                                                 So what we're doing rather than implementing massive amounts of change is 
                                                 we are, by store, talking about the specific input we're getting from our 
                                                 customers to rebuild the training, the staffing and really the roles of our team, 
                                                 so it aligns with what our customer is asking us to do differently, down to 
                                                 things as fundamental as making sure that the checkout is much smoother and 
                                                 much more effective than it’s been in the past. So that level of focus and 
                                                 prioritization is helping us to rebuild, not only the roles and the clarity of the 
                                                 role, but the purpose behind how we'll rebuild, engaging with our customers. 
 
                                                 The second piece of, I think even more important, our commitment is to work 
                                                 in the field. That's my commitment, it's our team's commitment, to build 
                                                 store-by-store, district-by-district plans to execute. That level of engagement 
                                                 creates a completely different level of involvement around – and ownership 
                                                 around – rebuilding the selling culture. My experience is that it makes it very 
                                                 personal and it creates the ownership level that creates sustainability that we 
                                                 will be able to deliver throughout the year, not just as a short term approach. 
 
Joe Feldman:                     Got it. Thanks. 
 
Bill Cimino:                     Thanks, Joe. 
 
Joe Feldman:                     Thank you. 

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Bill Cimino:                    Operator, we're ready for the next question please. 
 
Operator:                    And your next question comes from the line of Colin McGranahan with 
                                                 Bernstein. 
 
Colin McGranahan:                    Good morning. The first question is a little bit more of a broad question 
                                                 on gross margin. If you look historically, and really just focusing on the 
                                                 domestic segment to keep it clean, if you look historically, for the eight years 
                                                 prior to last year, this is a 23 to 24 percent gross margin business. And last 
                                                 year, the gross margin was under 20 percent. So I was hoping you could help 
                                                 me understand how much of that do you think was really Circuit City induced 
                                                 versus structural change in the television business? And is this ever a 23 
                                                 percent gross margin business again? And is it going to be a sub-20 percent 
                                                 gross margin business for at least fiscal '09 as you're starting to rebuild the 
                                                 culture of attachments and accessories? 
 
Bruce Besanko:                     Hey, Colin, Bruce here. I'll start and then flip the answer over to John Kelly 
                                                 who can build on it. 
 
                                                 So the short answer is, I think, much or all of that gross margin can come 
                                                 back. We've experienced a decline in gross margin this year in the second 
                                                 quarter, the third quarter and now the fourth quarter of 300 or more basis 
                                                 points. As Phil had indicated, the basis of this erosion really began at the end 
                                                 of fiscal '07 with the rapid commoditization of flat-panel TVs. Unfortunately, 
                                                 we aggravated the situation with the transformation work in the stores this 
                                                 past year, by inducing too much change too quickly. The consequence of that 
                                                 activity was a depressed margin that we saw, again in the second, third and 
                                                 now in the fourth quarter. 
 
                                                 The good news is that it is all self-induced and it is all within our control to 
                                                 fix. We have significant improvement opportunities, as we talked about in the 
                                                 earlier portion of the call, around improving the HE basket, continuing to 
                                                 grow the firedog services and enhanced disciplines principally around pricing 
                                                 shrink and markdowns. And I'll ask John to 

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John Kelly:                   And I will reiterate what Bruce says. I would say that it's all self-induced by 
                                                 Circuit City and we have a plan to recover this. And in addition to what 
                                                 Bruce said, I think that we have an obligation in better line transitions and 
                                                 pricing to make sure that we're more in line with what's going from a 
                                                 profitability standpoint and better assortment rationalization moving forward 
                                                 and making sure that we can optimize profit when it comes to that. 
 
                                                 In addition to the selling culture, of being able to up sell better products and 
                                                 better quality of products, I think John Harlow's already in that mode now to 
                                                 develop that selling culture. So to answer the first question, I think we can 
                                                 recover it. 
 
Phil Schoonover:                   This is Phil. I'd probably add two things to this. One is that we know in the 
                                                 marketplace that there are retailers that perform at higher margins and have 
                                                 not seen the precipitous deterioration that we experienced. And the other 
                                                 thing is, frankly, services as a percentage of our total business is a massive 
                                                 opportunity and as we grow our firedog services, absolutely and as a 
                                                 percentage of sales, it should further enhance our margin mix outcome. 
 
Colin McGranahan:                    OK. And then just a quick follow-up for Bruce, I think the income tax 
                                                 receivable and balance sheet, the 153 million, do you expect to collect all of 
                                                 that? It sounded like you were only going to collect about 80 million in the 
                                                 third quarter. And then as you collect that, depending on what your net 
                                                 owned inventory does during the year, it looks like you could be anywhere 
                                                 between zero and plus or minus 50 million cash balance by the end of the 
                                                 year, according to my estimate. Are there any constraints that you run into on 
                                                 availability of your secured credit facility? How does the availability look on 
                                                 that and what are the constraints to the whole 1.3 billion?
 
Bruce Besanko:                    OK. Let me do the ABL first. So just take a step back. As you know, we've 
                                                 renegotiated the credit facility at the end and in the first part of this year, 
                                                 moving it up from 500 million to 1.3 billion. It's a five-year deal, and as a 
                                                 reminder it has – there is really no financial covenants, Colin. It gives the 
                                                 company more than, in my view, more than ample liquidity, not just for this 
                                                 year, but for our multi-quarter turnaround efforts. 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 25

                                                 In terms of the tax receivable, we do expect to collect 80 million of the tax 
                                                 refund over the course of this year. The plan is to file this year's tax return 
                                                 quickly in order to secure the refund as quickly as we can. And so we see that 
                                                 as an additional source of liquidity. 
 
Colin McGranahan:                    And the remainder? Because on the balance sheet, it's 150 some. 
 
Bruce Besanko:                   It’s an additional refund that we may achieve as a consequence of the sale 
                                                 lease back and that – the timing of that is less clear. 
 
Colin McGranahan:                    OK. Thank you. 
 
Bill Cimino:                    Thanks, Colin. And, Operator, we have time for one last question please. 
 
Operator:                     And your last audio question comes from the line of Andy Hargreaves with 
                                                 Pacific Crest. 
 
Andy Hargreaves:                      Macro aside, there seems like there's a lot of deceleration in the product cycles 
                                                 that have been driving sales for the – to the last couple of years. So can you 
                                                 talk, I guess on a general basis, about what products you're expecting to drive 
                                                 growth this year? And is there anything new that could step up? And then I'll 
                                                 give my follow-on in front. On the music and DVD side, what is the plan to 
                                                 replace the traffic driving ability of those products? 
 
John Kelly:                    OK. This year, for sales, and this is John Kelly, there is going to be three 
                                                 unique events that'll actually drive sales this year, which is different than last 
                                                 year. The first one is, that we saw early in the year, was the economic 
                                                 stimulus checks. So we believe some of that will have some plus over last 
                                                 year from a standpoint of this year versus last year and plus driving some 
                                                 additional G&P into the economy. 
 
                                                 The second thing, we have the Olympics in August, which we feel will also 
                                                 help our television business and will grow, not only just television, but the 
                                                 whole digital experience. 
 
                                                 And last, but not least, the third one is the analog-to-digital transition will 
                                                 drive the television business this year as well as the audio business, the cable 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 26

                                                 and The Source business. And sales growth, from a product standpoint, will 
                                                 come in LCD television, specifically larger sizes, notebook computers 
                                                 continues to be a significant driver of volume for the total, GPS devices. And 
                                                 we actually see a little bit of a decline in projection tube and desktop 
                                                 computers this year. 
 
Phil Schoonover:                  The only thing that I'd add, this is Phil speaking, is that we have growth 
                                                 engine in our multi-channel business, where we've consistently outpaced the 
                                                 industry in growth on pure Web sales and over half of those sales have been 
                                                 picked up in our stores. And our underpenetration in firedog services is a 
                                                 tremendous growth engine for Circuit City. 
 
                                                 The biggest single variable in our sort of fish bone business model is closed 
                                                 rate and we've discussed all day today in our script and on the conference call, 
                                                 the tremendous opportunities we have, unique to Circuit City, to improve our 
                                                 closed rate. And then finally, the attach of high-margin services and 
                                                 accessories adds to revenue per transaction. So you combine closed rate with 
                                                 revenue transaction, we have opportunities to grow right within our core 
                                                 business despite the economy or other head winds we may face. 
 
Andy Hargreaves:                       And the expectation is that those improvements to the ASP in closed rates will 
                                                 offset any lower traffic levels? 
 
Phil Schoonover:                  So at the end of the day, we're – what we're doing to address traffic, I'm sorry, 
                                                 I forgot that part of your question. What we're doing to address traffic is our 
                                                 emphasis on Web generated sales that are picked up in the store. We think – 
                                                 we know that the super majority of consumer electronics industry growth will 
                                                 be generated on the Web. Our numbers show approximately two-thirds of the 
                                                 growth in the consumer electronics industry will be generated on the Web. 
                                                 And for us, over half that business picked up in the stores.
 
                                                 The inbound firedog services, so driving traffic into our stores through firedog 
                                                 services, and then just continued refinement of our promotional effectiveness 
                                                 model. There's still many other categories in sheer units that are growing. 
                                                 The gaming business, the iPod business, so we're focusing on those traffic 
                                                 generating items in our ads and promotions. 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 27

Andy Hargreaves:                       OK. Thanks. 
 
Bill Cimino:                       Thanks, Andy. And thanks to everyone for participating in today's calls and 
                                                 for your questions. 
 
                                                 Before we conclude the call, I'd like to remind you that a replay will be 
                                                 available by approximately noon Eastern Daylight Time today and will 
                                                 remain available through April 16th. Investors in the United States and 
                                                 Canada may access the recording at 1-800-642-1687 and other investors may 
                                                 dial area code 706-645-9291. The access code for the replay is 39012868. A 
                                                 replay of the call also will be available on the Circuit City investor 
                                                 information home page at investor.circuitcity.com. 
 
                                                 This concludes our call. Thank you. 
 
Operator:                       Thank you. This concludes today's Circuit City Fourth Quarter Results 
                                                 Conference Call. You may now disconnect. 
 
END

THIS COMMUNICATION MAY BE DEEMED TO BE SOLICITATION MATERIAL IN RESPECT OF CIRCUIT CITY'S SOLICITATION OF PROXIES IN CONNECTION WITH ITS 2008 ANNUAL MEETING OF SHAREHOLDERS. CIRCUIT CITY AND ITS DIRECTORS AND EXECUTIVE OFFICERS MAY BE DEEMED TO BE PARTICIPANTS IN SUCH SOLICITATION OF PROXIES. INFORMATION REGARDING THE SPECIAL INTERESTS OF THESE DIRECTORS AND EXECUTIVE OFFICERS IN SUCH SOLICITATION OF PROXIES WILL BE INCLUDED IN ANY PROXY STATEMENT FILED BY CIRCUIT CITY IN CONNECTION WITH THE 2008 ANNUAL MEETING OF SHAREHOLDERS. IN ADDITION, CIRCUIT CITY FILES ANNUAL, QUARTERLY AND SPECIAL REPORTS, PROXY AND INFORMATION STATEMENTS, AND OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”). THESE DOCUMENTS ARE AVAILABLE FREE OF CHARGE AT THE SEC’S WEB SITE AT WWW.SEC.GOV OR FROM CIRCUIT CITY AT HTTP://INVESTOR.CIRCUITCITY.COM. INVESTORS SHOULD READ ANY PROXY STATEMENT FILED IN CONNECTION WITH THE 2008 ANNUAL MEETING OF SHAREHOLDERS CAREFULLY WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION.

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 26

                                                 and The Source business. And sales growth, from a product standpoint, will 
                                                 come in LCD television, specifically larger sizes, notebook computers 
                                                 continues to be a significant driver of volume for the total, GPS devices. And 
                                                 we actually see a little bit of a decline in projection tube and desktop 
                                                 computers this year. 
 
Phil Schoonover:                  The only thing that I'd add, this is Phil speaking, is that we have growth 
                                                 engine in our multi-channel business, where we've consistently outpaced the 
                                                 industry in growth on pure Web sales and over half of those sales have been 
                                                 picked up in our stores. And our underpenetration in firedog services is a 
                                                 tremendous growth engine for Circuit City. 
 
                                                 The biggest single variable in our sort of fish bone business model is closed 
                                                 rate and we've discussed all day today in our script and on the conference call, 
                                                 the tremendous opportunities we have, unique to Circuit City, to improve our 
                                                 closed rate. And then finally, the attach of high-margin services and 
                                                 accessories adds to revenue per transaction. So you combine closed rate with 
                                                 revenue transaction, we have opportunities to grow right within our core 
                                                 business despite the economy or other head winds we may face. 
 
Andy Hargreaves:                       And the expectation is that those improvements to the ASP in closed rates will 
                                                 offset any lower traffic levels? 
 
Phil Schoonover:                  So at the end of the day, we're – what we're doing to address traffic, I'm sorry, 
                                                 I forgot that part of your question. What we're doing to address traffic is our 
                                                 emphasis on Web generated sales that are picked up in the store. We think – 
                                                 we know that the super majority of consumer electronics industry growth will 
                                                 be generated on the Web. Our numbers show approximately two-thirds of the 
                                                 growth in the consumer electronics industry will be generated on the Web. 
                                                 And for us, over half that business picked up in the stores.
 
                                                 The inbound firedog services, so driving traffic into our stores through firedog 
                                                 services, and then just continued refinement of our promotional effectiveness 
                                                 model. There's still many other categories in sheer units that are growing. 
                                                 The gaming business, the iPod business, so we're focusing on those traffic 
                                                 generating items in our ads and promotions. 

CIRCUIT CITY
Moderator: Philip Schoonover
04-09-08/9:00 a.m. CT
Confirmation # 39012868
Page 27

Andy Hargreaves:                       OK. Thanks. 
 
Bill Cimino:                       Thanks, Andy. And thanks to everyone for participating in today's calls and 
                                                 for your questions. 
 
                                                 Before we conclude the call, I'd like to remind you that a replay will be 
                                                 available by approximately noon Eastern Daylight Time today and will 
                                                 remain available through April 16th. Investors in the United States and 
                                                 Canada may access the recording at 1-800-642-1687 and other investors may 
                                                 dial area code 706-645-9291. The access code for the replay is 39012868. A 
                                                 replay of the call also will be available on the Circuit City investor 
                                                 information home page at investor.circuitcity.com. 
 
                                                 This concludes our call. Thank you. 
 
Operator:                       Thank you. This concludes today's Circuit City Fourth Quarter Results 
                                                 Conference Call. You may now disconnect. 
 
END

THIS COMMUNICATION MAY BE DEEMED TO BE SOLICITATION MATERIAL IN RESPECT OF CIRCUIT CITY'S SOLICITATION OF PROXIES IN CONNECTION WITH ITS 2008 ANNUAL MEETING OF SHAREHOLDERS. CIRCUIT CITY AND ITS DIRECTORS AND EXECUTIVE OFFICERS MAY BE DEEMED TO BE PARTICIPANTS IN SUCH SOLICITATION OF PROXIES. INFORMATION REGARDING THE SPECIAL INTERESTS OF THESE DIRECTORS AND EXECUTIVE OFFICERS IN SUCH SOLICITATION OF PROXIES WILL BE INCLUDED IN ANY PROXY STATEMENT FILED BY CIRCUIT CITY IN CONNECTION WITH THE 2008 ANNUAL MEETING OF SHAREHOLDERS. IN ADDITION, CIRCUIT CITY FILES ANNUAL, QUARTERLY AND SPECIAL REPORTS, PROXY AND INFORMATION STATEMENTS, AND OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”). THESE DOCUMENTS ARE AVAILABLE FREE OF CHARGE AT THE SEC’S WEB SITE AT WWW.SEC.GOV OR FROM CIRCUIT CITY AT HTTP://INVESTOR.CIRCUITCITY.COM. INVESTORS SHOULD READ ANY PROXY STATEMENT FILED IN CONNECTION WITH THE 2008 ANNUAL MEETING OF SHAREHOLDERS CAREFULLY WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION.