Pity Circuit City

For electronics also-ran Circuit City (NYSE: CC), performance has often been one step forward, and one step back. Today, we're looking at the backward thing again.

Crummy sales were no surprise. This outfit -- along with Wal-Mart (NYSE: WMT) -- was one of the post-Thanksgiving slackers whose woes contributed to all that late-November hand-wringing among the retail Chicken Littles in the financial press.

To review the sluggish sales picture, overall revenues barely ticked up, and comps, a better measure of a chain's health, were down 4.3%. Comparing Circuit City to outstanding peerBest Buy (NYSE: BBY) proves that something is just plain wrong. Those new commercials featuring semi-clueless gift buyers and a Cars soundtrack.... Could it be that I'm the only one who finds them clever? (Sound of aging new-waver removing skinny leather tie, dropping it in wastebasket.)

It wasn't all bad news. No surprise, the bottom line was still red, a $0.03 per share loss. But that's better than the negative $0.14 last year. Moreover, gross margins improved slightly, and the firm is flush with cash. SG&A is up, but that's something you'd expect from a firm trying to reinvigorate the brand through store upgrades and heavy advertising. Unfortunately, if sales don't get moving, investors aren't likely to see much reward.

Though electronics sales are reportedly surging this season, the trickle down seems to be thin for the bricks-and-mortar crowd. How can they compete with online poaching by Amazon.com (Nasdaq: AMZN) and Overstock.com (Nasdaq: OSTK)? I have my own radical idea. Hey, you with the keys to the executive washrooms, stop trying to shove those expensive, extended warranties down our throats. Yes, I know they look like easy, high-margin money for you -- you brag about it in the earnings release. But I also know I'm not the only shopper who feels violated when passing through your checkout lanes.

If I could avoid that aggravation, you might just lure me back from cyberspace, and you'd have at least one advantage over Best Buy, where I recently had to wait at a register so a manager could reward another warranty sale with a helium balloon. Desperate times call for desperate measures, Circuit City. How about making shopping fun and hassle-free?

Best Buy and Amazon.com are both Motley Fool Stock Advisor recommendations.

Overstock.com is a Motley Fool Rule Breakers recommendation.

For related Foolishness:

• Is Circuit City really improving?
• Or is Best Buy the best?
• Forget all the gloom and doom. The truth is more complex.

Seth Jayson has NEVER purchased an extended warranty, and never will. At the time of publication, he had no positions in any company mentioned. View his stock holdings and Fool profile here. Fool rules are here.