Sept. 29 (Bloomberg) -- Circuit City Stores Inc., the second-largest U.S. consumer electronics chain, has hired turnaround firm FTI Consulting Inc. as an adviser, according to two people with knowledge of the appointment.

FTI was hired to give advice on restructuring the chain, according to the people, who declined to be identified because the information isn't public. Circuit City has posted six straight quarters of falling sales, and reported a wider second- quarter loss today. FTI has advised bankrupt retailer Mervyn's LLC and has done work for derivatives broker MF Global Inc.

Circuit City replaced CEO Philip Schoonover Sept. 22 with James Marcum, who joined the board of directors three months ago as vice chairman. Marcum, 49, led Hollywood Entertainment Corp., a movie-rental chain, and Ultimate Electronics Inc., an electronics retailer owned by activist investor Mark Wattles, through bankruptcy.

``This is a very difficult time to be trying to turn this around, just incredibly difficult,'' David Schick, an analyst with Stifel Nicolaus & Co., said today in a telephone interview. ``And it's not going to get easier in October, November or December.''

``The risks of bankruptcy are very real,'' Schick 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.

Circuit City, based in Richmond, Virgina, has lost customers to larger Best Buy Co. and Wal-Mart Stores Inc. It reported a second-quarter loss that more than tripled to $239.2 million, or $1.45 a share, from $62.8 million, or 38 cents, a year earlier. A ``significant decline'' in shoppers pushed sales down 9.6 percent to $2.39 billion, the company said today in a statement.

Plans Suspended

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.

``We hire different advisers but won't disclose the specific ones,'' Circuit City said. ``We're doing everything we can to conserve equity and accelerate a turnaround.''

Robert Duffy, senior managing director at FTI, ``wasn't able to confirm'' FTI's hiring, spokeswoman Nicole Madison said in a Sept. 26 e-mail. Messages left for Duffy and Madison after regular business hours today weren't immediately returned.

Marcum is an associate of Wattles, who started a proxy fight and called for Schoonover's ouster earlier this year before agreeing to drop the push in exchange for three board seats, one of which went to Marcum.

Mervyn's, the California department-store chain that filed for bankruptcy two months ago, won court approval last week to hire FTI as its financial adviser, according to filings.

To contact the reporters on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net; Mark Clothier in Atlanta at mclothier@bloomberg.net; Jonathan Keehner in New York jkeehner@bloomberg.net

Last Updated: September 29, 2008 20:41 EDT