Standard & Poor’s analyst Michael Souers said he was maintaining his “Hold” rating on the retailer, but slashed his price target in half to $1.
“While we would applaud (Circuit City) for its attempt to stay solvent, we remain highly pessimistic on holiday sales, and on consumer spending in 2009,” he wrote in a research note to investors, adding that he was maintaining his projections that the company would lose $2.65 per share in 2009 and $2.48 per share in 2010.
The Richmond, Va.-based company, which is in the midst of a comprehensive review as it works to operate as a standalone business while exploring strategic alternatives, has had only one profitable quarter in the past year. It posted a wider second-quarter loss last month with a 13.3 percent decline in same-store sales.
The results came after Circuit City replaced its chief executive and withdrew its outlook for the full year because of traffic declines, stronger competition and a weak brand.
In May, Goldman Sachs & Co. was hired to help the retailer explore strategic options amid a now-withdrawn $1 billion takeover bid from Blockbuster Inc.
The Journal reported that Circuit City hired Skadden, Arps, Slate, Meagher & Flom LLP as its bankruptcy counsel earlier this month, citing unidentified people familiar with the matter. The newspaper also said the company hired FTI Consulting Inc. to develop a turnaround plan and has retained investment bank Rothschild Inc. to lead discussions with banks and acquire emergency financing.
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