Sept. 29 (Bloomberg) -- Circuit City Stores Inc. reported a wider loss as sales fell for the sixth straight quarter and cash dwindled, forcing the electronics retailer to accelerate turnaround efforts as the key holiday selling season approaches. Its shares dropped 21 percent.

Circuit City withdrew its forecast for the fiscal year ending Feb. 28. It suspended plans for any store openings for fiscal 2010 beyond commitments already made and may close unprofitable locations, while evaluating spending for this year and next. The chain has more than 1,480 stores.

A ``significant decline'' in customers pushed sales down 9.6 percent to $2.39 billion, and same-store sales fell 13 percent, Circuit City said. Larger rival Best Buy Co. and Wal- Mart Stores Inc. lowered prices on flat-panel televisions to lure customers spending tax rebate checks. Acting Chief Executive Officer James Marcum called Circuit City's results ``unacceptable.''

``It's tough to handicap, but with the numbers we're seeing and with the company withdrawing guidance and the balance sheet worsening, the situation is clearly becoming more dire,'' said Anthony Chukumba, an analyst with FTN Midwest Securities. ``The key question is, do they continue to get the support of their vendors? If their vendors stop supporting them, it could quickly spell `game over.''' He has a neutral rating on the shares.

Support of Vendors

The second-quarter net loss more than tripled to $239.2 million, or $1.45 a share, from $62.8 million, or 38 cents, a year earlier, the Richmond, Virginia-based company said today in a statement. Excluding a writedown of some assets, Circuit City beat analysts' estimates by 4 cents. Cash and short-term investments fell 78 percent to $92.5 million. Short-term debt rose to $215 million, from nothing a year ago.

``The risks of bankruptcy are very real,'' David Schick, an analyst with Stifel Nicolaus & Co., wrote in a research note today. ``Vendors will have to decide how they plan to do business at Circuit City.'' He recommends investors hold the shares.

``The fact that there was an economic stimulus package during the period and most retailers saw some blip, yet Circuit City's worsened against easier comparisons, is a pretty strong signal,'' Schick said in a telephone interview.

The company said today it's been able to buy the merchandise it needs for the holiday season and has the support of vendors. Circuit City makes most or all of its profit in the fiscal fourth quarter starting Dec. 1.

Dwindling Market Value

Circuit City fell 29 cents to $1.08 at 4:12 p.m. in New York Stock Exchange trading. The shares have declined 75 percent this year, while Best Buy slid 31 percent. Its market value has tumbled to $182 million from about $5.5 billion four years ago.

Seventeen analysts surveyed by Bloomberg estimated an average loss of $1.04 a share excluding some costs. Fourteen projected sales of $2.53 billion.

``We are committed to making the difficult decisions that may be necessary to accelerate our turnaround, improve both our operational and financial performance and deliver shareholder value,'' Marcum said in a statement.

Circuit City replaced CEO Phil Schoonover on Sept. 22 on an interim basis with Vice Chairman Marcum, a director who has led two retailers through bankruptcy. Marcum, 49, an associate of activist investor Mark Wattles, faces the task of reviving a chain with older locations in lower-income neighborhoods. Half its stores are in the U.S.; it has been trying to sell its Canadian unit, which has the rest of its stores.

Schoonover fired higher-paid workers and opened smaller stores in better locations to cut costs. The retailer put itself up for sale in May after Blockbuster Inc. made a preliminary offer that was later withdrawn.

Inventory fell 18 percent to $1.51 billion, headed into the holiday season, ``further weakening its competitive position,'' Dan Wewer, an analyst with Raymond James & Assoc. in Atlanta. He has an ``underperform'' rating on the shares.

Colin McGranahan, an analyst with Sanford C. Bernstein & Co., estimated a decline of 7 percent in same-store sales, those operating at least a year. By contrast, Best Buy's revenue from existing locations rose 4.2 percent in its second quarter.

To contact the reporter on this story: Mark Clothier in Atlanta at mclothier@bloomberg.net

Last Updated: September 29, 2008 16:22 EDT