Is Circuit City CEO's Ouster Too Little Too Late?
Schoonover's decision to chase retail behemoth Best Buy with no regard for what was best for shareholders, employees and most importantly customers has pushed Circuit City into a deep financial hole. Circuit City was forever chasing Best Buy. Schoonover had retail blinders on -- forever focused on Best Buy rather than a viable strategy for Circuit City.
Kevin Jones, the vice president of merchandising for Micro Center, a 21-store national chain which has enjoyed considerable growth with PC-passionate consumers that make $100,000 or more, said it best when evaluating a potential Circuit City Blockbuster combination earlier this year.
"You have to find a model that works," said Jones recently after a session at RetailVision, which is owned by ChannelWeb parent Everything Channel. "Blockbuster doesn't have a model that works. Circuit City doesn't have a model that works. How do you put the two together and make it work? How do you make it profitable? It's business 101."
"You have to have a business model that is replicatable before you start buying somebody," he said.
That business model question is one that Circuit City's board should think long and hard about now that Schoonover is history. The question is: can Schoonover's replacement, James Marcum,who was appointed "acting president and CEO," undo the damage that has been done?
Marcum, who has served as vice chairman since August, was elected as director to the Circuit City board in June 2008.
The board of directors also elected Allen King, 62, as chairman of the company's board of directors. King, who recently retired as chairman of Universal Corp., a company with operations in leaf tobacco, has been a member of Circuit City's board of directors since 2003 and its independent lead director since June 2008.
So what steps do Messrs. Marcum, King and the rest of the board intend to take now that they are steering the Circuit City ship? Probably looking at some sort of deal with a retail giant or a private equity company. Their options are limited -- extremely limited given the economic environment.
What's troubling for the company are the sentiments expressed by King regarding Schoonover.
"A change in leadership at the chief executive officer level is always a difficult decision, and Circuit City appreciates Phil's efforts over the past four years," continued King. "It is important to note that Phil has made many significant contributions during his tenure, including expanding our multi-channel capabilities, enhancing our services offering and developing the firedog brand. We thank him for his leadership and we wish him well with his future endeavors."
Leadership. Is King serious? Circuit City is a lot better off with Schoonover sitting on the sidelines. This is a time for taking responsibility for charting a new course not praising the CEO who led the retail giant into a hole. Marcum, King and the rest of the board have their work cut out for them. With some hard charging leadership, Circuit City can become a bigger and better company for shareholders, employees and, yes customers.