UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            -------------------------

                                    FORM 10-Q

(Mark One)

[X]      Quarterly  report  pursuant  to Section  13 or 15(d) of the  Securities
         Exchange Act of 1934 For the quarterly period ended May 31, 2008
                                       or

[ ]      Transition  report  pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934 For the transition period from ____ to _____


                         Commission file number: 1-5767

                            CIRCUIT CITY STORES, INC.
             (Exact name of registrant as specified in its charter)

          Virginia                               54-0493875
 (State or other jurisdiction of             (I.R.S. Employer
  incorporation or organization)             Identification No.)

            9950 Mayland Drive
            Richmond, Virginia                                    23233
(Address of principal executive offices)                        (Zip Code)

                                (804) 486 - 4000
              (Registrant's telephone number, including area code)

                                       N/A
(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No ___

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
the definitions of "large accelerated  filer,"  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer   |X|           Accelerated filer __          Non-accelerated filer __          Smaller reporting company__
                         -----

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes___ No   |X|

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                Class                                 Outstanding at May 31, 2008
     Common Stock, par value $0.50                              168,512,147




                            CIRCUIT CITY STORES, INC.
                                    FORM 10-Q
                                TABLE OF CONTENTS



PART I.  FINANCIAL INFORMATION

      Item 1.     Financial Statements:

                     Consolidated Statements of Operations -
                     Three Months Ended May 31, 2008 and 2007                                          3

                     Consolidated Balance Sheets -
                     May 31, 2008, and February 29, 2008                                               4

                     Consolidated Statements of Cash Flows -
                     Three Months Ended May 31, 2008 and 2007                                          5

                     Notes to Consolidated Financial Statements                                        6

      Item 2.     Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                                           14

      Item 3.     Quantitative and Qualitative Disclosures About Market Risk                          27

      Item 4.     Controls and Procedures                                                             28

PART II.          OTHER INFORMATION

      Item 1.     Legal Proceedings                                                                   28

      Item 1A.    Risk Factors                                                                        28

      Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds                         28

      Item 6.     Exhibits                                                                            30

SIGNATURES                                                                                            31

EXHIBIT INDEX                                                                                         32


                                  Page 2 of 32


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                            Circuit City Stores, Inc.
                Consolidated Statements of Operations (Unaudited)
                  (Amounts in thousands except per share data)


                                                                                                   Three Months Ended
                                                                                                         May 31
                                                                                               2008                   2007
                                                                                          --------------          -------------
Net sales                                                                                 $    2,301,074          $   2,485,537
Cost of sales, buying and warehousing                                                          1,822,400              1,925,352
                                                                                          --------------          -------------
Gross profit                                                                                     478,674                560,185
Selling, general and administrative expenses                                                     640,009                648,354
                                                                                          --------------          -------------
Operating loss                                                                                  (161,335)               (88,169)
Interest income                                                                                    1,168                  5,737
Interest expense                                                                                   1,682                     43
                                                                                          --------------          -------------
Loss from continuing operations before income taxes                                             (161,849)               (82,475)
Income tax expense (benefit)                                                                       2,966                (27,663)
                                                                                          --------------          -------------
Net loss from continuing operations                                                             (164,815)               (54,812)
Earnings from discontinued operations, net of tax                                                      -                    246
                                                                                          --------------          -------------
Net loss                                                                                  $     (164,815)         $     (54,566)
                                                                                          ==============          =============

Weighted average common shares:
    Basic                                                                                        164,949                165,842
    Diluted                                                                                      164,949                165,842

Loss per share:
    Basic:
       Continuing operations                                                              $        (1.00)         $       (0.33)
       Discontinued operations                                                            $            -          $        0.00
       Basic loss per share                                                               $        (1.00)         $       (0.33)

    Diluted:
       Continuing operations                                                              $        (1.00)         $       (0.33)
       Discontinued operations                                                            $            -          $        0.00
       Diluted loss per share                                                             $        (1.00)         $       (0.33)


Cash dividends paid per share                                                             $         0.04          $        0.04


See accompanying notes to consolidated financial statements.



                                  Page 3 of 32


                            Circuit City Stores, Inc.
                           Consolidated Balance Sheets
                    (Amounts in thousands except share data)

                                                                                         May 31, 2008          Feb. 29, 2008
                                                                                         ------------          -------------
                                                                                          (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                                                               $       90,848        $     296,055
Short-term investments                                                                           1,329                1,366
Accounts receivable, net of allowance for doubtful accounts                                    307,033              330,599
Merchandise inventory                                                                        1,686,314            1,573,560
Deferred income taxes, net of valuation allowance                                               28,571               38,672
Income tax receivable                                                                          161,765              158,116
Prepaid expenses and other current assets                                                       73,698               41,352
                                                                                        --------------        -------------

Total current assets                                                                         2,349,558            2,439,720

Property and equipment, net of accumulated depreciation of
     $1,481,216 and $1,448,250                                                               1,037,808            1,037,321
Goodwill                                                                                       116,928              118,031
Other intangible assets, net of accumulated amortization of
     $7,837 and $7,224                                                                          17,551               18,400
Other assets                                                                                   127,478              132,458
                                                                                        --------------         ------------

TOTAL ASSETS                                                                            $    3,649,323        $   3,745,930
                                                                                        ==============        =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Merchandise payable                                                                     $      933,190        $     912,094
Expenses payable                                                                               287,448              232,386
Accrued expenses and other current liabilities                                                 325,270              346,818
Accrued compensation                                                                            60,558               85,127
Accrued income taxes                                                                            17,427               17,680
Short-term debt                                                                                 55,000                    -
Current installments of long-term debt                                                          11,801               11,582
                                                                                        --------------        -------------

Total current liabilities                                                                    1,690,694            1,605,687

Long-term debt, excluding current installments                                                  60,831               57,050
Accrued straight-line rent                                                                     150,241              145,960
Deferred rent credits                                                                          163,893              163,662
Accrued lease termination costs                                                                 75,640               82,900
Deferred income taxes, net of valuation allowance                                               25,543               35,586
Other liabilities                                                                              149,750              151,910
                                                                                        --------------        -------------

TOTAL LIABILITIES                                                                            2,316,592            2,242,755
                                                                                        --------------        -------------
Commitments and contingent liabilities

Stockholders' equity:
Common stock, $0.50 par value;
     525,000,000 shares authorized; 168,512,147 shares
     issued and outstanding at May 31, 2008
     (168,859,462 at February 29, 2008)                                                        84,256                84,430
Additional paid-in capital                                                                    322,929               319,573
Retained earnings                                                                             809,624               981,112
Accumulated other comprehensive income                                                        115,922               118,060
                                                                                        -------------         -------------

TOTAL STOCKHOLDERS' EQUITY                                                                  1,332,731             1,503,175
                                                                                        -------------         -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                              $   3,649,323         $   3,745,930
                                                                                        =============         =============
See accompanying notes to consolidated financial statements.


                                  Page 4 of 32


                            Circuit City Stores, Inc.
                Consolidated Statements of Cash Flows (Unaudited)
                             (Amounts in thousands)

                                                                                                 Three Months Ended
                                                                                                       May 31
                                                                                              2008                  2007
                                                                                         -------------         ------------
Operating Activities:
Net loss                                                                                 $   (164,815)         $    (54,566)
Adjustments to reconcile net loss to net cash
      used in operating activities of continuing operations:
       Net earnings from discontinued operations                                                    -                  (246)
       Depreciation expense                                                                    45,106                48,981
       Amortization expense                                                                       669                 1,162
       Stock-based compensation expense                                                         3,208                 4,942
       Loss on dispositions of property and equipment                                           1,749                   245
       Provision for deferred income taxes                                                        847                 6,964
       Other                                                                                    1,803                  (376)
    Changes in operating assets and liabilities:
       Accounts receivable, net                                                                10,334                19,140
       Merchandise inventory                                                                 (114,150)              (99,455)
       Prepaid expenses and other current assets                                              (28,223)              (33,018)
       Other assets                                                                               905                  (497)
       Merchandise payable                                                                     18,966                (2,571)
       Expenses payable                                                                         6,626               (10,440)
       Accrued expenses, other current liabilities and income taxes                           (49,520)             (159,708)
       Other long-term liabilities                                                             (9,031)               24,835
                                                                                         -------------         ------------
Net cash used in operating activities of continuing operations                               (275,526)             (254,608)
                                                                                         ------------          ------------

Investing Activities:
Purchases of property and equipment                                                           (50,753)              (65,661)
Proceeds from sales of property and equipment                                                  22,880                10,992
Purchases of investment securities                                                                  -              (238,675)
Sales and maturities of investment securities                                                       -               585,260
Other investing activities                                                                        139                (1,823)
                                                                                         ------------          ------------
Net cash (used in) provided by investing activities of continuing operations                  (27,734)              290,093
                                                                                         ------------          ------------

Financing Activities:
Proceeds from short-term borrowings                                                           405,000                 4,515
Principal payments on short-term borrowings                                                  (350,000)                    -
Principal payments on long-term debt                                                           (3,398)               (2,090)
Changes in overdraft balances                                                                  53,263               (28,709)
Excess tax benefit from stock-based compensation                                                    -                   470
Repurchases of common stock                                                                         -               (46,757)
Issuances of common stock                                                                           -                 3,237
Dividends paid                                                                                 (6,663)               (6,782)
Other financing activities                                                                        (37)                  (25)
                                                                                         ------------          ------------
Net cash provided by (used in) financing activities of continuing operations                   98,165               (76,141)
                                                                                         ------------          ------------

Discontinued Operations:
Operating cash flows                                                                                -                11,240
Investing cash flows                                                                                -                     -
Financing cash flows                                                                                -                   (57)
                                                                                         ------------          ------------
Net cash provided by discontinued operations                                                        -                11,183
                                                                                         ------------          ------------
Effect of exchange rate changes on cash                                                          (112)                  641
                                                                                         ------------          ------------

Decrease in cash and cash equivalents                                                        (205,207)              (28,832)
Cash and cash equivalents at beginning of year                                                296,055               141,141
                                                                                         -------------         ------------
Cash and cash equivalents at end of period                                               $     90,848          $    112,309
                                                                                         =============         ============

See accompanying notes to consolidated financial statements.


                                  Page 5 of 32


                            CIRCUIT CITY STORES, INC.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1.   Basis of Presentation

     Circuit  City  Stores,  Inc.  is a leading  specialty  retailer of consumer
     electronics,  home office  products,  entertainment  software,  and related
     services. The company has two reportable segments: its domestic segment and
     its international segment.

     The domestic  segment is engaged in the business of selling  brand-name and
     private-label  consumer  electronics,  personal  computers,   entertainment
     software,  and related  services in its stores in the United States and via
     the Web at  www.circuitcity.com  and www.firedog.com.  At May 31, 2008, the
     company's  domestic segment operated 687 Superstores and 9 outlet stores in
     158 U.S. media markets.

     The  international  segment,  which  is  comprised  of  the  operations  of
     InterTAN,  Inc.,  is engaged in the business of selling  private-label  and
     brand-name  consumer  electronics in Canada.  The  international  segment's
     headquarters  are  located  in Barrie,  Ontario,  Canada,  and it  operates
     through  retail  stores and dealer  outlets in Canada  primarily  under the
     trade name The Source By Circuit CitySM. At May 31, 2008, the international
     segment  conducted  business  through 775 retail stores and dealer outlets,
     which consisted of 502  company-owned  stores and 273 dealer  outlets.  The
     international  segment  also  operates a Web site at  www.thesource.ca.  In
     February  2007,  the board of directors  authorized  management  to explore
     strategic alternatives for InterTAN,  Inc., which could include the sale of
     the operation.

     Effective  January 28,  2007,  the company  returned the  management  of 92
     Rogers  Plus(R)  stores to Rogers  Wireless  Inc.  Results  from the Rogers
     Plus(R)  stores are presented as results from  discontinued  operations for
     the three months ended May 31, 2007.

     In May 2008,  the  company  retained  Goldman,  Sachs & Co.  to assist  the
     company in exploring strategic alternatives to enhance shareholder value.

     The preparation of financial  statements in conformity with U.S.  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that  affect the  reported  amounts  of  assets,  liabilities,
     revenues  and  expenses  and  the  disclosure  of  contingent   assets  and
     liabilities.   Actual  results  may  differ  from  these   estimates.   The
     accompanying  unaudited  financial  statements contain all adjustments of a
     normal,  recurring nature, except as otherwise disclosed herein, which are,
     in the opinion of management, necessary for a fair presentation. Due to the
     seasonal  nature  of  the  company's  business,  interim  results  are  not
     necessarily indicative of results for the entire fiscal year. The company's
     consolidated financial statements included in this report should be read in
     conjunction  with the  notes to the  audited  financial  statements  in the
     company's fiscal 2008 annual report on Form 10-K.

     Within the financial tables in this quarterly report on Form 10-Q,  certain
     columns  and  rows  may  not  sum due to the  use of  rounded  numbers  for
     disclosure  purposes.   Percentages   presented  are  calculated  from  the
     underlying whole-dollar amounts.

2.   Recent Accounting Pronouncements

     As permitted under transition rules by the Financial  Accounting  Standards
     Board ("FASB"),  the company  partially adopted the provisions of Statement
     of  Financial   Accounting   Standards   ("SFAS")  No.  157,   "Fair  Value
     Measurements,"  as of March 1, 2008, on a prospective  basis.  SFAS No. 157
     defines fair value,  establishes a framework  for measuring  fair value and
     expands disclosures about fair value measurements.  This Statement does not
     require any new fair value measurements, but applies to existing accounting
     pronouncements  that  require  or  permit  fair  value  measurement  as the
     relevant measurement attribute. As permitted by FASB Staff Position No. FAS
     157-2, "Effective Date of FASB Statement No. 157,"


                                  Page 6 of 32


     the  company  delayed the  adoption  of SFAS No. 157 for all  non-financial
     assets and non-financial  liabilities,  except those that are recognized or
     disclosed at fair value in the financial  statements  on a recurring  basis
     (at least annually),  until March 1, 2009. The partial adoption of SFAS No.
     157 did not have an impact on the company's financial position,  results of
     operations or cash flows. The full adoption of SFAS No. 157 is not expected
     to have a material effect on the company's financial  position,  results of
     operations or cash flows.

     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
     Financial Assets and Financial  Liabilities." SFAS No. 159 permits entities
     to choose to measure  many  financial  instruments  and certain  assets and
     liabilities at fair value.  The company adopted SFAS No. 159 as of March 1,
     2008.  As the  company  did not elect the fair value  option for any of its
     financial instruments or other assets and liabilities, the adoption of this
     standard  did not have an  impact on its  financial  position,  results  of
     operations or cash flows.

     On March 1, 2008,  the  company  adopted  Emerging  Issues Task Force Issue
     06-11,  "Accounting  for Income Tax Benefits of  Dividends  on  Share-Based
     Payment Awards," ("EITF 06-11") on a prospective basis. This Issue requires
     income tax benefits from dividends or dividend equivalents that are charged
     to  retained  earnings  and are  paid to  employees  for  equity-classified
     nonvested  equity shares,  nonvested  equity share units,  and  outstanding
     equity share options to be recognized as an increase to additional  paid-in
     capital. During the first quarter of fiscal 2009, the income tax benefit of
     these dividends could not be recognized  because the company has recorded a
     full  valuation  allowance  against  the  deferred  tax  assets of its U.S.
     operations.  Thus, the adoption of EITF 06-11 did not have an impact on the
     company's financial position, results of operations or cash flows.

     In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations,"
     and SFAS No.  160,  "Noncontrolling  Interests  in  Consolidated  Financial
     Statements,  an amendment of ARB No. 51." These new standards significantly
     change  the   accounting   for  and   reporting  of  business   combination
     transactions  and  noncontrolling  interests  (previously  referred  to  as
     minority interests) in consolidated  financial  statements.  Both standards
     will be  effective  for the  company  beginning  with the first  quarter of
     fiscal  2010  and  will  be  applied   prospectively   to  future  business
     combinations.

     In April  2008,  the  FASB  issued  FASB  Staff  Position  No.  FAS  142-3,
     "Determination of the Useful Life of Intangible Assets," ("FSP No. 142-3").
     This FSP amends the factors that should be considered in developing renewal
     or extension  assumptions used to determine the useful life of a recognized
     intangible  asset  under  SFAS No.  142,  "Goodwill  and  Other  Intangible
     Assets".  The intent of this FSP is to improve the consistency  between the
     useful  life of a  recognized  intangible  asset under SFAS No. 142 and the
     period of  expected  cash flows used to measure the fair value of the asset
     under  SFAS  No.  141(R)  and  other  U.S.  generally  accepted  accounting
     principles.  This FSP is effective for the company as of March 1, 2009, and
     will be applied prospectively to future business combinations.

     In May 2008,  the FASB issued SFAS No. 162,  "The  Hierarchy  of  Generally
     Accepted  Accounting  Principles."  SFAS No. 162  identifies the sources of
     accounting  principles and the framework for selecting the principles  used
     in the preparation of financial statements.  SFAS No. 162 will be effective
     60 days following the Securities and Exchange  Commission's approval of the
     Public Company  Accounting  Oversight  Board  amendments to AU Section 411,
     "The  Meaning of  Present  Fairly in  Conformity  with  Generally  Accepted
     Accounting  Principles."  The company  does not expect the adoption of this
     standard to have an impact on its financial position, results of operations
     or cash flows.

     In June  2008,  the FASB  issued  FSP  EITF  03-6-1,  "Determining  Whether
     Instruments Granted in Share-Based  Payment  Transactions Are Participating
     Securities,"  ("FSP EITF 03-6-1").  This FSP addresses whether  instruments
     granted in share-based  payment  transactions are participating  securities
     prior to vesting and, therefore,  need to be included in computing earnings
     per share under the two-class method  described in SFAS No. 128,  "Earnings
     Per Share." This FSP will be effective for the company  beginning  with the
     first  quarter  of fiscal  2010 and will be  applied  retrospectively.  The
     company is currently evaluating the impact of adopting FSP EITF 03-6-1.


                                  Page 7 of 32


3.   Loss Per Share

     For the three months ended May 31,  2008,  and May 31, 2007,  no options or
     nonvested  stock were included in the computation of diluted loss per share
     because the company reported a net loss from continuing operations.  Shares
     excluded were as follows:

                                                                        Three Months Ended
                                                                             May 31
     (Shares in millions)                                                2008        2007
     -------------------------------------------------------------------------------------
     Options......................................................        9.8         8.6
     Nonvested stock..............................................        4.1         4.0

4.   Income Taxes

     Quarterly,  the company evaluates its deferred income taxes to determine if
     valuation  allowances  are  required.   During  fiscal  2008,  the  company
     determined that its U.S.  operations had generated a cumulative  three-year
     loss. Based on the cumulative three-year loss and other available objective
     evidence,  management  concluded that a full valuation  allowance should be
     recorded  against the net deferred tax assets of the U.S.  operations.  The
     total  valuation  allowance was $192.6  million at May 31, 2008, and $129.8
     million at February 29, 2008.  The increase in the  valuation  allowance is
     attributable to the loss generated by the company's U.S.  operations during
     the three months ended May 31, 2008.

     During the first quarter of fiscal 2009,  the company  recorded  income tax
     expense of $3.0  million  on a loss from  continuing  operations  of $161.8
     million.  Due to the  valuation  allowance,  the  company did not record an
     income tax benefit for the first quarter loss of its U.S.  operations.  The
     income tax  expense is  comprised  primarily  of  discrete  items and state
     income tax expense, partially offset by a benefit recognized related to the
     pre-tax loss of the company's Canadian  operations.  The discrete items are
     comprised  primarily of an  adjustment to a  previously-filed  tax position
     related to leases.

5.   Exit and Other Activities

     At a location's  cease-use date, estimated lease termination costs to close
     a store,  distribution  center or repair  center are  recorded  in selling,
     general and  administrative  expenses  on the  consolidated  statements  of
     operations.  Accrued lease  termination  costs include future minimum lease
     payments,  taxes,  insurance and maintenance costs from the date of closure
     to the end of the  remaining  lease  term less  estimated  sublease  rental
     income, net of tenant  improvement  allowances and broker fees. The company
     evaluates  these   assumptions  each  quarter  and  adjusts  the  liability
     accordingly.  The liability for lease termination costs is discounted using
     a credit-adjusted risk-free rate of interest.

     The accrual for lease  termination  costs for the domestic segment includes
     the following activity:

                                                                                          Three Months Ended
                                                                                                 May 31
     (Amounts in millions)                                                                2008             2007
     ----------------------------------------------------------------------------------------------------------
     Accrued lease termination costs at beginning of period......................       $115.5            $105.6
     Provisions for closed locations.............................................          0.6                 -
     Changes in assumptions about future sublease income.........................         (0.1)              2.4
     Interest accretion..........................................................          2.4               2.0
     Cash payments, net of cash received on subleased locations..................         (9.2)             (8.6)
                                                                                      --------------------------
     Accrued lease termination costs at end of period............................        109.2             101.4
     Less current portion of accrued lease termination costs.....................         33.6              29.7
                                                                                      --------------------------
     Non-current portion of accrued lease termination costs......................       $ 75.6            $ 71.7
                                                                                      ==========================


                                  Page 8 of 32


     At May  31,  2008,  accrued  lease  termination  costs  of  $109.2  million
     consisted of 94 locations,  of which 39 were  subleased.  The provision for
     closed  locations  included  in the  table  above  represents  the  initial
     estimate of lease  termination  costs for locations at the cease-use  date.
     The  current  portion of accrued  lease  termination  costs is  included in
     accrued expenses and other current liabilities, and the non-current portion
     is presented separately, on the consolidated balance sheets.

     At February 29, 2008,  accrued severance totaled $10.0 million.  During the
     first  quarter of fiscal  2009,  the  company  made cash  payments  of $2.5
     million  and  recorded  an  additional  charge of $0.6  million  related to
     severance arrangements. The additional charge is recorded in cost of sales,
     buying and  warehousing  or selling,  general and  administrative  expenses
     depending on the  classification of the related employee's payroll expense.
     At May 31, 2008, accrued severance totaled $8.1 million.  Accrued severance
     is included in accrued compensation on the consolidated balance sheets.

6.   Stock-Based Compensation

     Under the company's stock-based  incentive plans, stock options,  nonvested
     stock,  nonvested stock units and other equity-based  awards may be granted
     to employees  and  non-employee  directors.  At May 31,  2008,  2.0 million
     shares of common stock were available for future grants.  Common shares are
     issued from  authorized  and  unissued  shares  upon the  exercise of stock
     options,  the  grant  of  nonvested  stock  or the  vesting  of or lapse of
     deferral restrictions on nonvested stock units.

     Compensation  expense for stock-based  incentive plans is summarized in the
     table below.

                                                                       Three Months Ended
                                                                             May 31
     (Amounts in millions)                                            2008            2007
     -----------------------------------------------------------------------------------------
     Compensation expense recognized:
        Stock options...........................................       $1.9            $2.6
        Nonvested stock and nonvested stock units...............        1.3             2.3
        Phantom stock units.....................................        0.9            (0.1)
        Employee stock purchase plan............................        0.1             0.2
        Other...................................................        0.1             0.1
                                                                  ----------------------------
             Total compensation expense recognized..............       $4.3            $5.1
                                                                  ============================
     Tax benefit recognized, before valuation allowance.........       $1.6            $1.8

     Stock-based  compensation  expense is recorded in cost of sales, buying and
     warehousing or in selling, general and administrative expenses depending on
     the   classification   of  the  related   employee's   payroll  cost.   The
     classification  of  stock-based  compensation  expense is summarized in the
     table below.


                                                                        Three Months Ended
                                                                              May 31
     (Amounts in millions)                                             2008           2007
     -------------------------------------------------------------------------------------
     Cost of sales, buying and warehousing......................       $0.6            $0.6
     Selling, general and administrative expenses...............        3.7             4.5
                                                                      ---------------------
     Total compensation expense recognized......................       $4.3            $5.1
                                                                      =====================

     The company recognizes stock-based compensation expense net of an estimated
     forfeiture rate based on historical  forfeiture activity.  During the three
     months  ended May 31, 2008,  and the three  months ended May 31, 2007,  the
     company increased the estimated  forfeiture rate on certain nonvested stock
     awards  to  reflect  changes  in  expectations   regarding  the  number  of
     instruments  that will vest.  These  changes were the result of higher than
     anticipated actual forfeitures, due in part to restructuring activities.


                                  Page 9 of 32


7.   Comprehensive Loss

     Comprehensive  loss  consists of net loss and certain  other items that are
     recorded directly to stockholders' equity, net of deferred income taxes. In
     addition  to  net  loss,   comprehensive  loss  includes  foreign  currency
     translation  adjustments,  adjustments  to reflect the funded status of the
     company's pension plans on the consolidated  balance sheets, and unrealized
     gains and losses on available-for-sale securities.

     The components of comprehensive loss, net of taxes, were as follows:

                                                                       Three Months Ended
                                                                             May 31
     (Amounts in millions)                                            2008            2007
     --------------------------------------------------------------------------------------
     Net loss...................................................    $(164.8)         $(54.6)
     Foreign currency translation adjustments...................       (1.9)           16.6
     Other......................................................       (0.2)            0.1
                                                                   -------------------------
     Comprehensive loss.........................................    $(167.0)         $(37.9)
                                                                    ========================


8.   Pension Plans

     The  company's  domestic  segment  has a  noncontributory  defined  benefit
     pension plan and an unfunded  nonqualified  benefit  restoration  plan that
     restored  retirement  benefits for domestic  segment senior  executives who
     were affected by Internal  Revenue Code  limitations  on benefits  provided
     under the company's  defined  benefit pension plan. Both plans were amended
     to freeze benefit accruals  effective  February 28, 2005, except for select
     grandfathered  participants  who  were at or near  their  early  or  normal
     retirement date. Both plans were further amended to freeze benefit accruals
     for the  grandfathered  participants  as of February 29, 2008. As a result,
     all  participants  in the plans are no longer  eligible to  increase  their
     benefits under the plans,  but will retain any benefits accrued through the
     effective date of the plan amendments.

     The components of net pension income for the plans were as follows:

                                                                  Three Months Ended
                                                                         May 31
     (Amounts in millions)                                       2008             2007
     ---------------------------------------------------------------------------------
     Service cost..........................................      $   -          $  0.6
     Interest cost.........................................        4.1             4.0
     Expected return on plan assets........................       (5.5)           (5.2)
     Recognized prior service cost.........................          -             0.1
     Recognized actuarial (gain) loss......................       (0.1)            0.4
                                                               -----------------------
     Net pension income....................................      $(1.5)         $ (0.1)
                                                               =======================

     The company did not make any  contributions  to the defined benefit pension
     plan during the three  months  ended May 31,  2008.  No  contributions  are
     required during fiscal 2009 under applicable law for this pension plan. The
     company intends to make any  contributions  necessary to meet ERISA minimum
     funding standards and intends to make additional contributions as needed to
     ensure that the fair value of plan assets at February 28, 2009, is equal to
     or exceeds the accumulated benefit obligation.

     A  contribution  of $0.8  million,  which is equal to the expected  benefit
     payments for fiscal 2009,  is expected to be made to the  restoration  plan
     during fiscal 2009.  Benefit payments during the three months ended May 31,
     2008, were $0.2 million.


                                 Page 10 of 32


9.   Discontinued Operations

     For the quarter ended May 31, 2007,  earnings from discontinued  operations
     totaled $0.2  million,  which is net of $0.2 million of income  taxes,  and
     primarily  related to the operations of the Rogers Plus(R) stores, of which
     the management was returned to Rogers Wireless Inc. in January 2007.

10.  Segment Information

     The company  has two  reportable  segments:  its  domestic  segment and its
     international  segment.  The company identified these segments based on its
     management  reporting structure and the nature of the products and services
     offered by each segment.  The domestic segment is primarily  engaged in the
     business of selling  brand-name  and  private-label  consumer  electronics,
     personal  computers,  entertainment  software,  and related services in the
     United  States.  The  international  segment  is  primarily  engaged in the
     business of selling  private-label and brand-name  consumer  electronics in
     Canada.

     Net sales by reportable segment were as follows:

                                                                       Three Months Ended
                                                                             May 31
     (Amounts in millions)                                            2008           2007
     ----------------------------------------------------------------------------------------
     Domestic segment..........................................     $2,166.8        $2,376.9
     International segment.....................................        134.3           108.6
                                                                 ---------------------------
     Net sales.................................................     $2,301.1        $2,485.5
                                                                 ===========================


     The (loss)  earnings  from  continuing  operations  before  income taxes by
     reportable segment were as follows:

                                                                       Three Months Ended
                                                                             May 31
     (Amounts in millions)                                            2008           2007
     --------------------------------------------------------------------------------------
     Domestic segment..........................................      $(159.9)        $(86.4)
     International segment.....................................         (1.9)           3.9
                                                                 --------------------------
     Loss from continuing operations
          before income taxes..................................      $(161.8)        $(82.5)
                                                                 ==========================

     The  international  segment's  earnings from continuing  operations  before
     income taxes for the three months ended May 31, 2007, include a recovery of
     $7.5 million related to a former subsidiary.

     Total assets by reportable segment were as follows:

                                                                    At May 31         At February 29
     (Amounts in millions)                                            2008                 2008
     ------------------------------------------------------------------------------------------------
     Domestic segment.........................................      $3,240.9              $3,335.7
     International segment....................................         408.4                 410.3
                                                                  -----------------------------------
     Total assets.............................................      $3,649.3              $3,745.9
                                                                 ====================================


                                 Page 11 of 32


     The domestic segment net sales by category were as follows:


                                                         Three Months Ended May 31
                                                     2008                       2007
                                                           % of                      % of
     (Dollar amounts in millions)                  $       Sales             $       Sales
     ----------------------------------------------------------------------------------------
     Video................................     $  889.4     41.0%        $   934.0     39.3%
     Information technology...............        591.4     27.3             628.6     26.4
     Audio................................        262.6     12.1             334.9     14.1
     Entertainment........................        262.1     12.1             272.5     11.5
     Warranty, services and other(a)......        161.3      7.5             206.9      8.7
                                            -------------------------------------------------
     Net sales............................     $2,166.8    100.0%         $2,376.9    100.0%
                                            ===============================================

     (a)  Warranty,  services and other  includes  extended  warranty net sales;
     revenues from PC services, mobile installations, home theater installations
     and product  repairs;  net  financing;  and revenues from third parties for
     services subscriptions.

     The international segment net sales by category were as follows:


                                                        Three Months Ended May 31
                                                     2008                       2007
                                                           % of                      % of
     (Dollar amounts in millions)                $         Sales           $         Sales
     ----------------------------------------------------------------------------------------
     Video................................    $ 25.6        19.0%       $ 20.0        18.5%
     Information technology...............      47.3        35.3          39.8        36.6
     Audio................................      44.0        32.8          36.5        33.6
     Entertainment........................       9.3         7.0           5.0         4.6
     Warranty, services and other(a)......       8.0         5.9           7.3         6.7
                                            -------------------------------------------------
     Net sales............................    $134.3       100.0%       $108.6       100.0%
                                            =================================================

     (a)  Warranty,  services and other  includes  extended  warranty  sales and
     product repair revenue.


11.  Supplemental Consolidated Statements of Cash Flows Information

     The following table summarizes supplemental cash flow information.

                                                                                               Three Months Ended
                                                                                                      May 31
     (Amounts in millions)                                                                    2008              2007
     ----------------------------------------------------------------------------------------------------------------
     Supplemental schedule of non-cash investing and financing activities:
       Non-cash capital expenditures(a)..................................................    $20.6             $34.4
       Capital lease obligations.........................................................    $ 7.4             $ 0.3
       Sale-leaseback receivables(a).....................................................    $ 4.2             $ 2.3

     (a) Amounts disclosed in prior quarters reflected the change in the accrual
     and  receivable  balances  rather  than the  balances  related to  non-cash
     transactions  arising  during the  quarter.  Prior year  amounts  have been
     corrected  to  reflect  the  non-cash  transactions  for the  quarter.  The
     correction did not impact the statements of cash flows in any period.

12.  Risks and Uncertainties

     The company  experienced  a net loss in the first quarter of fiscal 2009 of
     $164.8 million,  and its cash, cash equivalents and short-term  investments
     position  declined  from $297.4  million at  February  29,  2008,  to $92.2
     million  at  May  31,  2008.  The  company  has  projected  only  a  modest
     improvement  in its loss for fiscal 2009  compared  with its loss of $319.9
     million for fiscal 2008. This outlook is based on the following:

     o   A continuation  of current  operating  trends through the first half of
         fiscal 2009 and an improvement in second half trends


                                 Page 12 of 32


     o   A continuation of weak macroeconomic trends,  particularly in the first
         half of the fiscal year

     o   Improved retail  execution,  leading to higher close rates and improved
         basket, offsetting a decline in store traffic

     o   Sales growth in key product areas including LCD  televisions,  notebook
         computers  and  video  gaming  products,  offset by sales  declines  in
         projection and tube  televisions,  desktop computers and portable audio
         products

     o   Improvements in merchandise margins, shrink and markdowns

     o   Low-single-digit percentage growth in SG&A dollars compared with fiscal
         2008 driven by incremental  and relocated  store openings and increased
         compensation costs

     The  company  has taken steps to enhance  its  liquidity  by  amending  and
     increasing its asset-based  credit facility in January 2008 to $1.3 billion
     from $500 million.  The company's plans to manage its liquidity position in
     fiscal 2009 include improving close rates and attachment rates, which would
     have a positive impact on both sales and margin;  improving working capital
     through targeted  improvements in net-owned  inventory;  reducing projected
     capital  expenditures  by $85  million  to $105  million  below  prior year
     levels;  suspending  repurchases  of common stock;  maintaining  an intense
     focus on controlling  expenses;  and maintaining strong  relationships with
     its   vendors  to  ensure   continued   availability   of  vendor   credit.
     Additionally,   in  June  2008,  the  board  of  directors   suspended  the
     declaration and payment of quarterly cash dividends on the company's common
     stock as part of its focus on conserving capital.

     The  company  has  considered  the impact of the  financial  outlook on its
     liquidity  and has  performed  an  analysis of the key  assumptions  in its
     forecast such as sales,  gross margin and SG&A  expenses;  an evaluation of
     its relationships  with vendors,  including  availability of vendor credit;
     and an analysis of cash  requirements,  including its  net-owned  inventory
     position, other working capital changes, capital expenditures and borrowing
     availability  under  the  credit  facility.  Based  on these  analyses  and
     evaluations,  the company expects that its anticipated sources of liquidity
     will be sufficient to meet its  obligations  without  disposition of assets
     outside of the ordinary course of business or significant  revisions of its
     planned operations through fiscal 2009.

13.  Subsequent Event

     On June 19, 2008,  the company  announced  that its board of directors  has
     suspended the  declaration  and payment of quarterly  cash dividends on the
     company's common stock, effective immediately.


                                 Page 13 of 32


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

We are a  leading  specialty  retailer  of  consumer  electronics,  home  office
products,  entertainment  software, and related services. We have two reportable
segments: our domestic segment and our international segment.

Our  domestic  segment is  engaged in the  business  of selling  brand-name  and
private-label consumer electronics, personal computers,  entertainment software,
and  related  services  in our  stores in the  United  States and via the Web at
www.circuitcity.com  and www.firedog.com.  At May 31, 2008, the domestic segment
operated 687 Superstores and 9 outlet stores in 158 U.S. media markets.

Our  international  segment,  which is comprised of the  operations of InterTAN,
Inc.,  is  engaged  in the  business  of selling  private-label  and  brand-name
consumer  electronics in Canada.  The international  segment's  headquarters are
located in Barrie,  Ontario,  Canada,  and it operates through retail stores and
dealer  outlets in Canada  primarily  under the trade name The Source By Circuit
CitySM.  At May 31, 2008, the international  segment conducted  business through
775 retail  stores and dealer  outlets,  which  consisted  of 502  company-owned
stores and 273 dealer  outlets.  The  international  segment also operates a Web
site at  www.thesource.ca.  In February 2007, the board of directors  authorized
management to explore  strategic  alternatives  for InterTAN,  Inc., which could
include the sale of the operation.

Effective  January 28, 2007,  we returned the  management  of 92 Rogers  Plus(R)
stores to Rogers  Wireless  Inc.  Results  from the  Rogers  Plus(R)  stores are
presented as results from discontinued operations for the three months ended May
31, 2007.

In May  2008,  we  retained  Goldman,  Sachs & Co.  to  assist  us in  exploring
strategic alternatives to enhance shareholder value.

Management's Discussion and Analysis (MD&A) is designed to provide the reader of
financial  statements with a narrative  discussion of our results of operations;
financial  position,  liquidity  and  capital  resources;   critical  accounting
policies and significant estimates; and the impact of recently issued accounting
standards. Our MD&A is presented in seven sections:

     o   Executive Summary
     o   Critical Accounting Policies
     o   Results of Operations
     o   Recent Accounting Pronouncements
     o   Financial Condition
     o   Financial Outlook
     o   Forward-Looking Statements

This discussion  should be read in conjunction with our  Consolidated  Financial
Statements and accompanying Notes included in this report and in the fiscal 2008
annual  report on Form  10-K,  as well as our  reports on Form 8-K and other SEC
filings.

Within the  financial  tables in this  quarterly  report on Form  10-Q,  certain
columns and rows may not sum due to the use of rounded  numbers  for  disclosure
purposes.  Percentages presented are calculated from the underlying whole-dollar
amounts. All per share amounts are presented on a fully diluted basis.

EXECUTIVE SUMMARY

Fiscal 2009 First Quarter Performance

o    Net sales  declined 7.4 percent to $2.30  billion from $2.49 billion in the
     same period last fiscal year, driven by a comparable store sales decline of
     11.3 percent.

o    In the domestic segment,  direct channel sales, which include Web- and call
     center-originated sales, grew 3 percent, and firedogSM PC services and home
     theater installation revenues decreased 16 percent from the


                                 Page 14 of 32


     same period last fiscal year.  In the first quarter of last fiscal year, we
     posted direct channel sales growth of 21 percent, and firedogSM PC services
     and home theater installation revenues increased 70 percent.

o    Gross profit margin  declined 174 basis points to 20.8 percent due to lower
     merchandise margins as well as a decrease in extended warranty net sales in
     the domestic segment.

o    SG&A expenses as a percentage of net sales  increased 173 basis points from
     the same period last fiscal  year,  which  primarily  reflects  the overall
     de-leveraging impact of lower sales in the domestic segment.

o    The loss from continuing  operations before income taxes was 7.0 percent of
     net sales  compared with a loss from  continuing  operations  before income
     taxes of 3.3 percent of net sales in the same period last year.

o    We reported a net loss from  continuing  operations of $164.8  million,  or
     $1.00 per share, for the first quarter of fiscal 2009,  compared with a net
     loss from  continuing  operations of $54.8 million,  or $0.33 per share, in
     the same period last fiscal year.

CRITICAL ACCOUNTING POLICIES

See the discussion of critical  accounting  policies in Management's  Discussion
and Analysis of Financial Condition and Results of Operations in our fiscal 2008
annual  report on Form  10-K.  These  policies  relate to  inventory  valuation,
goodwill,   income  taxes,   accrued  lease   termination   costs,   stock-based
compensation and pension plans.


RESULTS OF OPERATIONS

Our  operations,  consistent  with other  retailers  in general,  are subject to
seasonal  influences.  Historically,  we have realized more of our net sales and
net earnings in the fourth  quarter,  which includes the majority of the holiday
selling season, than in any other fiscal quarter. The net (loss) earnings of any
quarter are seasonally  disproportionate  to net sales since  administrative and
certain  operating   expenses  remain  relatively   constant  during  the  year.
Therefore, quarterly results should not be relied upon as necessarily indicative
of results for the entire fiscal year.

Summary of Segment Performance

Where  relevant,  we have  included  separate  discussions  of our  domestic and
international segments. The following tables summarize performance by segment.

SEGMENT PERFORMANCE SUMMARY


                                                               Three Months Ended May 31, 2008
                                                 Domestic                 International                Consolidated
                                                         % of                       % of                        % of
(Dollar amounts in millions)                   $         Sales            $         Sales            $          Sales
-------------------------------------------------------------------------------------------------------------------------
Net sales...............................   $2,166.8     100.0%         $134.3      100.0%         $2,301.1      100.0%
Gross profit............................   $  434.1      20.0%         $ 44.6       33.2%         $  478.7       20.8%
Selling, general and administrative
    expenses............................   $  593.4      27.4%         $ 46.6       34.7%         $  640.0       27.8%
Loss from continuing
    operations before income taxes......   $ (159.9)     (7.4)%        $ (1.9)      (1.5)%        $ (161.8)      (7.0)%


                                 Page 15 of 32


                                                               Three Months Ended May 31, 2007
                                                 Domestic                 International               Consolidated
                                                         % of                       % of                       % of
(Dollar amounts in millions)                   $         Sales           $          Sales            $         Sales
-------------------------------------------------------------------------------------------------------------------------
Net sales...............................   $2,376.9     100.0%         $108.6      100.0%         $2,485.5      100.0%
Gross profit............................   $  520.5      21.9%         $ 39.7       36.6%         $  560.2       22.5%
Selling, general and administrative
    expenses............................   $  612.5      25.8%         $ 35.9       33.0%         $  648.4       26.1%
(Loss) earnings from continuing
    operations before income taxes........ $  (86.4)     (3.6)%        $  3.9        3.6%         $  (82.5)      (3.3)%



Net Sales

Consolidated

For the first  quarter of fiscal 2009,  our net sales  decreased  7.4 percent to
$2.30 billion,  and comparable  store sales decreased 11.3 percent from the same
period last fiscal year. A store's sales are included in comparable  store sales
after  the  store has been open for a full 12  months.  Comparable  store  sales
include  Web- and call  center-originated  sales and sales  from  relocated  and
remodeled  stores.  Sales from closed  stores are included in  comparable  store
sales  until  the month in which the  stores  are  closed.  The  calculation  of
comparable  store sales excludes the impact of fluctuations in foreign  currency
exchange rates.

Our major sales categories are

o    video,  which  includes  televisions,   imaging  products,   DVD  hardware,
     camcorders, furniture, and related accessories;

o    information  technology,  which  includes PC  hardware,  telecommunications
     products and related accessories;

o    audio,  which  includes  home  audio,  mobile  audio,  portable  audio  and
     navigation products, and related accessories;

o    entertainment,   which  includes  movie  software,   music  software,  game
     software, game hardware and PC software; and

o    warranty,  services and other,  which includes extended warranty net sales;
     revenues from PC services, mobile installations, home theater installations
     and product  repairs;  net  financing;  and  revenues  received  from third
     parties for services subscriptions.


Domestic Segment

For the first  quarter of fiscal  2009,  the domestic  segment's  net sales were
$2.17 billion,  a decrease of 8.8 percent from the same period last fiscal year.
Comparable store sales decreased 12.2 percent driven by a decline in traffic and
close rates as compared  to the same period last fiscal  year.  During the first
quarter of fiscal 2009,  comparable store average ticket was approximately  flat
to the  same  period  last  fiscal  year.  The  sub-category  with  the  largest
comparable store sales growth was large LCD  televisions.  Video gaming products
and  digital-to-analog  converter boxes also showed strong sales growth.  We had
broad-based  weakness across most other  categories,  including other television
sub-categories,  information  technology products,  audio products and music and
movie  software.  We saw continued  weakness  across all regions of the country,
though the strongest comparable store sales declines were in Florida, California
and the Rocky  Mountain  region.  Similar to the prior  quarter,  the  northeast
region performed relatively better than other regions.  For the quarter,  direct
channel sales grew 3 percent. The direct channel sales growth was lower than


                                 Page 16 of 32


historical  year-over-year growth due primarily to a less aggressive promotional
stance in categories such as PC hardware and televisions.

The domestic  segment's net sales  represented  by each major sales category for
the three months ended May 31, 2008 and 2007, are shown below.


NET SALES BY CATEGORY

                                                     Three Months Ended May 31
                                                2008                       2007
                                                      % of                      % of
(Dollar amounts in millions)                  $       Sales             $       Sales
----------------------------------------------------------------------------------------
Video................................     $  889.4     41.0%         $  934.0    39.3%
Information technology...............        591.4     27.3             628.6    26.4
Audio................................        262.6     12.1             334.9    14.1
Entertainment........................        262.1     12.1             272.5    11.5
Warranty, services and other.........        161.3      7.5             206.9     8.7
                                       -------------------------------------------------
Net sales............................     $2,166.8    100.0%         $2,376.9   100.0%
                                       ===============================================


In the video category, we generated a slight double-digit comparable store sales
decrease in the first quarter.  Comparable store sales of flat panel televisions
increased  by a  high-single  digit.  Total  television  comparable  store sales
experienced  a single digit  decrease,  as  significant  comparable  store sales
decreases in  projection  and tube  televisions  more than offset the flat panel
television  increase.  Comparable  store sales of digital  imaging  products and
accessories and camcorders decreased by double digits.

In  the  information  technology  category,  we  generated  a  high-single-digit
comparable store sales decrease in the first quarter.  Comparable store sales of
desktop  computers  declined by double  digits,  and  comparable  store sales of
notebook computers increased by a low-single digit.

In the audio  category,  we  generated  a  double-digit  comparable  store sales
decrease in the first  quarter.  Comparable  store sales of navigation  products
increased  by a low-single  digit.  Comparable  store sales of portable  digital
audio, mobile and home audio products declined by strong double digits.

In the entertainment category, we generated a high-single-digit comparable store
sales  decrease in the first  quarter.  Comparable  store sales of video  gaming
products  increased by double digits.  Comparable  store sales of video software
and music software declined by double digits.

Domestic segment extended warranty net sales were $53.8 million,  or 2.5 percent
of  domestic  segment  net  sales,  in the first  quarter,  compared  with $73.7
million,  or 3.1 percent of domestic  segment net sales, in the same period last
year. FiredogSM PC services and home theater installation  revenues decreased 16
percent to $54.3  million in the first  quarter  from $64.4  million  last year.
FiredogSM PC services and home theater  installation  revenue performance in the
prior year period was the second highest  year-over-year  dollar increase in our
history due primarily to an effective home theater installation bundle offer and
the benefits of the launch of Microsoft Windows Vista.

The following table provides the number of our domestic segment stores:

DOMESTIC SEGMENT STORE MIX

                                                         May 31, 2008        Feb. 29, 2008         May 31, 2007
---------------------------------------------------------------------------------------------------------------
Superstores.......................................            687                 682                   643
Other stores......................................              9                  11                    13
                                                      ----------------------------------------------------------
Total domestic segment stores.....................            696                 693                   656
                                                      ==========================================================


                                 Page 17 of 32


International Segment

The  international  segment's net sales increased 23.6 percent to $134.3 million
for the first quarter of fiscal 2008, compared with $108.6 million for the first
quarter of last fiscal year. The increase was driven by the favorable  impact of
fluctuations  in  foreign  currency  exchanges  rates  of  14  percent  and  the
comparable  store  sales  increase  of 10.5  percent  in local  currency.  These
increases were partially offset by the impact of the year-over-year net decrease
of 25 retail stores and dealer outlets.


NET SALES BY CATEGORY

                                                   Three Months Ended May 31
                                                2008                       2007
                                                      % of                      % of
(Dollar amounts in millions)                $         Sales           $         Sales
----------------------------------------------------------------------------------------
Video................................   $  25.6        19.0%       $ 20.0        18.5%
Information technology...............      47.3        35.3          39.8        36.6
Audio................................      44.0        32.8          36.5        33.6
Entertainment........................       9.3         7.0           5.0         4.6
Warranty, services and other.........       8.0         5.9           7.3         6.7
                                       ------------------------------------------------
Net sales............................    $134.3       100.0%       $108.6       100.0%
                                       ===============================================


INTERNATIONAL SEGMENT STORE MIX

                                                          May 31, 2008       Feb. 29, 2008         May 31, 2007
---------------------------------------------------------------------------------------------------------------
Company-owned stores..............................            502                 502                   505
Dealer outlets....................................            273                 277                   294
Battery Plus(R) stores..............................            -                   -                     1
                                                        --------------------------------------------------------
Total international segment stores................            775                 779                   800
                                                        ========================================================


Gross Profit Margin

Consolidated

The gross profit  margin was 20.8  percent of net sales in the first  quarter of
fiscal 2009,  compared with 22.5 percent for the same period last fiscal year, a
decline of 174 basis points.  The domestic segment  contributed 207 basis points
to the 174 basis point decrease in the  consolidated  gross profit  margin.  The
international segment favorably impacted the consolidated gross profit margin by
34 basis points.

Domestic Segment

The domestic  segment's gross profit margin was 20.0 percent of domestic segment
net sales in the first  quarter of fiscal 2009,  compared  with 21.9 percent for
the same period last fiscal year, a decline of 186 basis points. The decline was
driven primarily by a decrease of 62 basis points in extended warranty net sales
as a percent of  domestic  segment  net sales as well as a decrease of 114 basis
points in merchandise  margins as a percent of domestic  segment net sales.  The
lower  merchandise  margins were driven  primarily by negative mix shifts within
imaging and notebook  computers as well as clearance  activities and an increase
in the mix of sales of  notebook  computers.  The  year-over-year  change in the
gross margin rate was the smallest  decline in five  quarters as we saw improved
performance  in the  television  category,  primarily  driven by assortment  and
promotional mix shifts within the category.

An increase in shrink also contributed to the gross margin decline. In the first
quarter,  we  continued  to record our shrink  estimate at the same rate that we
realized  for fiscal  2008.  We will do so until we conduct  physical  inventory
counts which are expected to occur in the third quarter.


                                 Page 18 of 32


International Segment

The   international   segment's   gross  profit   margin  was  33.2  percent  of
international  segment net sales in the first  quarter of fiscal 2009,  compared
with 36.6  percent for the same period last fiscal  year, a decline of 337 basis
points.  The decrease  resulted  primarily  from an increased  mix of sales from
clearance   product  across  many  categories  as  well  as  a  mix  shift  from
higher-margin categories.


Selling, General and Administrative Expenses

Consolidated

                                                  Three Months Ended May 31
                                                 2008                   2007
                                                      % of                    % of
(Dollar amounts in millions)                   $      Sales          $        Sales
------------------------------------------------------------------------------------
Store expenses..........................     $529.7   23.0%        $556.7     22.4%
General and administrative
     expenses...........................       99.1    4.3           85.5      3.4
Stock-based compensation
     expense............................        3.7    0.2            4.5      0.2
Remodel expenses........................        0.0    0.0           (0.0)    (0.0)
Relocation expenses.....................        1.0    0.0            1.1      0.0
Pre-opening expenses....................        6.4    0.3            0.5      0.0
                                          ----------------------------------------
Total  .................................     $640.0   27.8%        $648.4     26.1%
                                          =========================================

Selling,  general and administrative  expenses were 27.8 percent of consolidated
net sales in the first  quarter of fiscal 2009,  compared  with 26.1 percent for
the same period last fiscal year, an increase of 173 basis points.  The domestic
segment and  international  segment  contributed  115 basis  points and 58 basis
points,  respectively,  to the  increase  in the  consolidated  expense-to-sales
ratio.

Domestic Segment

                                                  Three Months Ended May 31
                                                 2008                    2007
                                                      % of                    % of
(Dollar amounts in millions)                   $      Sales          $        Sales
------------------------------------------------------------------------------------
Store expenses..........................     $492.1   22.7%        $524.2       22.1%
General and administrative
     expenses...........................       90.3    4.2           82.4        3.5
Stock-based compensation
     expense............................        3.5    0.2            4.3        0.2
Remodel expenses........................        0.0    0.0           (0.0)      (0.0)
Relocation expenses.....................        1.0    0.0            1.1        0.0
Pre-opening expenses....................        6.4    0.3            0.5        0.0
                                          ---------------------------------------------
Total  .................................     $593.4   27.4%        $612.5       25.8%
                                          =============================================

For the three months ended May 31, 2008, the domestic segment's expense-to-sales
ratio  increased  162 basis  points from the same period last fiscal  year.  The
increase  primarily  reflects the overall  de-leveraging  impact of lower sales.
Also  contributing  to the increase  was a 124 basis point  increase in expenses
related to the 65 domestic segment  Superstores that have opened during the past
12 months.  Partially  offsetting these increases was an 81 basis point decrease
in  compensation  costs  that  resulted  primarily  from our  expense  reduction
initiatives.


                                 Page 19 of 32


International Segment

                                                   Three Months Ended May 31
                                                 2008                   2007
                                                      % of                    % of
(Dollar amounts in millions)                   $      Sales          $        Sales
------------------------------------------------------------------------------------
Store expenses..........................      $37.6   28.0%         $32.6     30.0%
General and administrative
     expenses...........................        8.8    6.6            3.1      2.9
Stock-based compensation
     expense............................        0.2    0.1            0.2      0.1
                                          ------------------------------------------
Total  .................................      $46.6   34.7%         $35.9     33.0%
                                          =========================================

For  the  first   quarter   of  fiscal   2009,   the   international   segment's
expense-to-sales ratio increased 171 basis points from the same period last year
primarily  due  to a $7.5  million  recovery  related  to a  former  subsidiary,
reducing fiscal 2008 general and administrative  expenses.  The recovery,  which
was not repeated in fiscal 2009, negatively impacted the expense-to-sales  ratio
increase by 691 basis points.

Income Tax Expense (Benefit)

During the first quarter of fiscal 2009, we recorded  income tax expense of $3.0
million  on a loss from  continuing  operations  of $161.8  million.  Due to the
valuation  allowance,  we did not  record an income  tax  benefit  for the first
quarter  loss of our U.S.  operations.  The  income  tax  expense  is  comprised
primarily of discrete items and state income tax expense,  partially offset by a
benefit recognized related to the pre-tax loss of our Canadian  operations.  The
discrete  items are comprised  primarily of an adjustment to a  previously-filed
tax position related to leases.

Net Loss from Continuing Operations

The net loss from continuing  operations was $164.8 million, or $1.00 per share,
in the three months ended May 31, 2008, compared with a net loss from continuing
operations of $54.8 million,  or $0.33 cents per share,  in the same period last
fiscal year.

Earnings from Discontinued Operations

For the three  months ended May 31, 2007,  the net  earnings  from  discontinued
operations  totaled $0.2 million,  which is net of $0.2 million of income taxes,
and primarily  related to the operations of the Rogers Plus(R) stores,  of which
the management was returned to Rogers Wireless Inc. in January 2007.

RECENT ACCOUNTING PRONOUNCEMENTS

As permitted under transition rules by the Financial  Accounting Standards Board
("FASB"),  we  partially  adopted  the  provisions  of  Statement  of  Financial
Accounting Standards ("SFAS") No. 157, "Fair Value Measurements," as of March 1,
2008, on a  prospective  basis.  SFAS No. 157 defines fair value,  establishes a
framework  for  measuring  fair value and expands  disclosures  about fair value
measurements.  This Statement does not require any new fair value  measurements,
but applies to existing  accounting  pronouncements  that require or permit fair
value measurement as the relevant  measurement  attribute.  As permitted by FASB
Staff  Position No. FAS 157-2,  "Effective  Date of FASB  Statement No. 157," we
delayed  the  adoption  of  SFAS  No.  157  for  all  non-financial  assets  and
non-financial liabilities, except those that are recognized or disclosed at fair
value in the  financial  statements  on a recurring  basis (at least  annually),
until March 1, 2009. The partial adoption of SFAS No. 157 did not have an impact
on our  financial  position,  results  of  operations  or cash  flows.  The full
adoption  of SFAS No.  157 is not  expected  to have a  material  effect  on our
financial position, results of operations or cash flows.


                                 Page 20 of 32


In February  2007,  the FASB issued  SFAS No.  159,  "The Fair Value  Option for
Financial  Assets and Financial  Liabilities."  SFAS No. 159 permits entities to
choose to measure many financial  instruments and certain assets and liabilities
at fair value.  We adopted SFAS No. 159 as of March 1, 2008. As we did not elect
the fair value option for any of our financial  instruments  or other assets and
liabilities,  the  adoption  of this  standard  did not  have an  impact  on our
financial position, results of operations or cash flows.

On March 1, 2008, we adopted Emerging Issues Task Force Issue 06-11, "Accounting
for Income Tax Benefits of  Dividends on  Share-Based  Payment  Awards,"  ("EITF
06-11") on a prospective  basis.  This Issue  requires  income tax benefits from
dividends or dividend  equivalents that are charged to retained earnings and are
paid to employees  for  equity-classified  nonvested  equity  shares,  nonvested
equity share units, and outstanding  equity share options to be recognized as an
increase to additional paid-in capital. During the first quarter of fiscal 2009,
the income tax benefit of these  dividends  could not be  recognized  because we
have recorded a full valuation  allowance against the deferred tax assets of our
U.S. operations.  Thus, the adoption of EITF 06-11 did not have an impact on our
financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 141(R),  "Business Combinations," and
SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an
amendment  of  ARB  No.  51."  These  new  standards  significantly  change  the
accounting  for  and  reporting  of  business   combination   transactions   and
noncontrolling  interests  (previously  referred  to as minority  interests)  in
consolidated  financial  statements.  Both  standards  will be effective  for us
beginning   with  the  first   quarter  of  fiscal  2010  and  will  be  applied
prospectively to future business combinations.

In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, "Determination
of the Useful Life of Intangible Assets," ("FSP No. 142-3"). This FSP amends the
factors that should be considered in developing renewal or extension assumptions
used to determine  the useful life of a recognized  intangible  asset under SFAS
No. 142,  "Goodwill and Other  Intangible  Assets." The intent of this FSP is to
improve the consistency between the useful life of a recognized intangible asset
under  SFAS No. 142 and the period of  expected  cash flows used to measure  the
fair value of the asset under SFAS No. 141(R) and other U.S.  generally accepted
accounting  principles.  This FSP is effective  for us as of March 1, 2009,  and
will be applied prospectively to future business combinations.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally  Accepted
Accounting  Principles."  SFAS No. 162  identifies  the  sources  of  accounting
principles  and  the  framework  for  selecting  the  principles   used  in  the
preparation  of  financial  statements.  SFAS No. 162 will be  effective 60 days
following  the  Securities  and  Exchange  Commission's  approval  of the Public
Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting  Principles." We
do not expect the adoption of this  standard to have an impact on our  financial
position, results of operations or cash flows.

In June 2008, the FASB issued FSP EITF 03-6-1,  "Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities," ("FSP
EITF 03-6-1").  This FSP addresses  whether  instruments  granted in share-based
payment  transactions  are  participating   securities  prior  to  vesting  and,
therefore,  need to be  included  in  computing  earnings  per  share  under the
two-class method described in SFAS No. 128,  "Earnings Per Share." This FSP will
be effective for us beginning  with the first quarter of fiscal 2010 and will be
applied retrospectively.  We are currently evaluating the impact of adopting FSP
EITF 03-6-1.


                                 Page 21 of 32


FINANCIAL CONDITION

Liquidity and Capital Resources

Cash Flows

Cash Flows Summary
The following table summarizes our cash flows for the three months ended May 31,
2008 and 2007:

                                                                 Three Months Ended
                                                                        May 31
(Amounts in millions)                                           2008             2007
----------------------------------------------------------------------------------------
Net cash (used in) provided by:
  Operating activities....................................    $(275.5)         $(254.6)
  Investing activities....................................      (27.7)           290.1
  Financing activities....................................       98.2            (76.1)
  Discontinued operations.................................          -             11.2
Effect of exchange rate changes on cash...................       (0.1)             0.6
                                                            --------------------------
Decrease in cash and
  cash equivalents........................................    $(205.2)         $ (28.8)
                                                            ==========================

Operating Activities
For the three months ended May 31, 2008,  net cash used in operating  activities
was $275.5  million,  compared  with net cash used in  operating  activities  of
$254.6  million  in the three  months  ended May 31,  2007.  The  change was due
primarily  to a net loss of $164.8  million for the three  months  ended May 31,
2008, compared with net loss of $54.6 million for the three months ended May 31,
2007.  Partially  offsetting  the  impact of the  increase  in the net loss were
changes in  operating  assets and  liabilities,  primarily  the  increase in the
income  tax  receivable  during the first  quarter  of fiscal  2008 that was not
repeated  during the first  quarter of fiscal 2009 due to our inability to carry
the net operating loss of the U.S. operations back to prior periods.

Investing Activities
Net cash used in  investing  activities  was $27.7  million for the three months
ended May 31, 2008,  compared with net cash provided by investing  activities of
$290.1  million  for the three  months  ended May 31,  2007.  The change was due
primarily to a decrease in net sales and  maturities of  investment  securities,
partially offset by a decrease in purchases of property and equipment.

Financing Activities
For the  three  months  ended  May 31,  2008,  net cash  provided  by  financing
activities  was  $98.2  million,  compared  with  net  cash  used  in  financing
activities of $76.1  million in the three months ended May 31, 2007.  The change
was due primarily to cash provided by book overdrafts and an increase in the net
cash provided by proceeds from short-term borrowings during the first quarter of
fiscal 2009.

We have a  revolving  credit  facility  secured by  inventory  and  credit  card
receivables.  This  facility  is used to  support  letters of credit and to meet
borrowing needs.  Loans primarily bear interest at a spread over either LIBOR or
prime.  The facility has a stated  commitment of $1.3 billion,  which includes a
$1.25 billion  commitment for the domestic segment and a $50 million  commitment
for the  international  segment,  and is scheduled to expire in January 2013. In
general,  the maximum  amount of  borrowings,  including  loans and  outstanding
letters  of  credit,  outstanding  on any date may not  exceed  the  lesser of a
borrowing base  calculated as a percentage of our eligible  inventory and credit
card  receivables  or 90 percent of $1.3 billion.  We are required to maintain a
minimum level of available borrowings under the facility.

At May 31, 2008, we had outstanding letters of credit of $48.8 million and $55.0
million of short-term borrowings related to the domestic segment, leaving $963.0
million available for borrowing under the credit facility. We were in compliance
with all covenants at May 31, 2008. While the level of borrowings may vary


                                 Page 22 of 32


during the quarters, we expect double-digit  borrowings by the end of the second
quarter  and no  borrowings  by the end of the third  quarter  for the  domestic
segment.

The board of directors has  previously  authorized  the repurchase of up to $1.2
billion of common stock, of which $233.7 million  remained  available at May 31,
2008. We did not  repurchase  common stock during the three months ended May 31,
2008. During the three months ended May 31, 2007, we used cash to repurchase 2.5
million  shares of common stock at an average  price of $18.68 per share,  for a
total price of $46.7 million,  excluding commission fees. As of May 31, 2008, we
had  repurchased  60.4  million  shares of common  stock at an average  price of
$16.01 per share,  for a total  price of $966.3  million,  excluding  commission
fees, cumulatively since inception of the stock repurchase program.

On June 19, 2008,  we announced  that our board of directors  has  suspended the
declaration  and  payment of  quarterly  cash  dividends  on our  common  stock,
effective immediately.

Net-owned Inventory
Merchandise  inventory  increased to $1.69  billion at May 31, 2008,  from $1.57
billion at February 28, 2008.  Net-owned  inventory  increased by $91.7  million
from February 29, 2008, to May 31, 2008.  Domestic segment  net-owned  inventory
increased by $99.9 million from  February 29, 2008,  to May 31, 2008,  primarily
due to seasonal inventory build.

Capital Expenditures
Capital expenditures, net of landlord reimbursements,  were $38.1 million in the
three months ended May 31, 2008,  compared with $63.3 million in the same period
last fiscal year. The decrease in capital expenditures was driven primarily by a
decrease in non-store investments.

Sources of Liquidity
Our primary sources of liquidity  include  borrowings under the credit facility,
available cash and cash equivalents,  expected reductions in net-owned inventory
and  landlord  reimbursements  for store  construction.  The  facility  contains
representations and warranties, conditions, covenants and events of default that
are  customary  for this  type of  credit  facility;  however,  it  contains  no
financial  covenants.  It places  limitations  on specific  uses of  borrowings,
including for dividends,  stock repurchases and acquisitions.  We do not believe
the  limitations  contained  in the credit  facility  will,  in the  foreseeable
future,  adversely affect our ability to use the credit facility and execute our
business plan.

Potential  additional  sources of cash in fiscal 2009 include  proceeds from the
sale of a subsidiary  and an income tax refund due to the carryback of a portion
of our net operating  loss for the 2008 fiscal year.  We will  evaluate  funding
alternatives as necessary to support future needs.

Expected uses of cash in fiscal 2009 include  contractual  obligations and funds
required to support our operating activities, including an increase in inventory
levels in advance of the holiday season. Potential uses of cash that are subject
to  our  discretion  include  capital  expenditures,  primarily  for  new  store
construction,  store  relocations,  information  technology systems and existing
store updates.

We experienced a net loss in the first quarter of fiscal 2009 of $164.8 million,
and our cash, cash equivalents and short-term investments position declined from
$297.4  million at February 29, 2008,  to $92.2 million at May 31, 2008. We have
projected  only a modest  improvement  in our loss for fiscal 2009 compared with
our loss of  $319.9  million  for  fiscal  2008.  This  outlook  is based on the
following:

o    A continuation of current operating trends through the first half of fiscal
     2009 and an improvement in second half trends

o    A continuation of weak macroeconomic trends, particularly in the first half
     of the fiscal year

o    Improved  retail  execution,  leading to higher  close  rates and  improved
     basket, offsetting a decline in store traffic


                                 Page 23 of 32


o    Sales  growth in key product  areas  including  LCD  televisions,  notebook
     computers and video gaming products, offset by sales declines in projection
     and tube televisions, desktop computers and portable audio products

o    Improvements in merchandise margins, shrink and markdowns

o    Low-single-digit  percentage  growth in SG&A dollars  compared  with fiscal
     2008 driven by  incremental  and  relocated  store  openings and  increased
     compensation costs

We have taken steps to enhance our  liquidity  by amending  and  increasing  our
asset-based  credit  facility in January 2008 to $1.3 billion from $500 million.
Our plans to manage our liquidity  position in fiscal 2009 include improving our
close rates and  attachment  rates,  which would have a positive  impact on both
sales and margin;  improving  working capital through  targeted  improvements in
net-owned  inventory;  reducing projected capital expenditures by $85 million to
$105 million below prior year levels;  suspending  repurchases  of common stock;
maintaining an intense focus on controlling  expenses;  and  maintaining  strong
relationships  with our  vendors  to  ensure  continued  availability  of vendor
credit.  Additionally,  in June  2008,  the  board of  directors  suspended  the
declaration  and payment of quarterly cash dividends on our common stock as part
of our focus on conserving capital.

We have considered the impact of the financial outlook on our liquidity and have
performed  an analysis of the key  assumptions  in our  forecast  such as sales,
gross margin and SG&A expenses; an evaluation of our relationships with vendors,
including  availability of vendor credit;  and an analysis of cash requirements,
including our net-owned  inventory  position,  other  working  capital  changes,
capital expenditures and borrowing availability under our credit facility. Based
on these analyses and  evaluations,  we expect that our  anticipated  sources of
liquidity  will be sufficient to meet our  obligations  without  disposition  of
assets outside of the ordinary  course of business or  significant  revisions of
our planned operations through fiscal 2009.

FINANCIAL OUTLOOK

We reaffirm the  following  expectations  for fiscal 2009 as of the date of this
filing:

o    Consolidated net sales relatively unchanged from the prior year

o    A mid-single digit domestic segment comparable store sales decline

o    Improvement in earnings from continuing operations before income taxes as a
     percentage of consolidated net sales of 50 basis points to 100 basis points

o    No income tax expense or benefit, excluding discrete items, associated with
     the domestic segment

o    Depreciation and amortization expense of approximately $185 million

o    A reduction in domestic segment net-owned inventory from February 29, 2008,
     to February 28, 2009, of $50 million to $100 million


Our forecast for capital expenditures,  net of landlord reimbursements,  is $120
million to $140 million for fiscal 2009.

For the second quarter,  we expect to record a loss from  continuing  operations
before  income taxes of $170 million to $185  million,  compared  with a loss of
$128.2  million in the prior year second  quarter.  While the  expected  loss is
larger than the prior year period,  the  year-over-year  increase in the loss is
significantly  smaller than the increase in the first quarter loss.  The primary
driver of the difference in expected  second  quarter  results from actual first
quarter results is higher expenses associated with more store openings.


                                 Page 24 of 32


Due to  operating  improvements,  traction  against  current  sales-  and  gross
margin-driving  initiatives,  and more favorable year-over-year  comparisons, we
expect a gradual  recovery in the second half of fiscal  2009.  We expect to see
year-over-year  improvements in operating results beginning in the third quarter
and improved pre-tax profit from continuing  operations in the fourth quarter as
compared to fiscal  2008  results.  We believe  that we have  adequate  cash and
borrowing capacity to complete the next phase of the turnaround plan.

We  continue  to  expect  to open 45 to 55 new and  relocated  domestic  segment
Superstores in fiscal 2009.  Domestic segment Superstore  openings estimates are
shown in the following table. The timing of store openings depends upon a number
of factors and can change  during the year.  All of our  remaining  openings for
fiscal 2009 will be in the city(TM) format.


Domestic Segment Superstore Openings Estimates(a)

                                              Q1(a)    Q2            Q3        Q4     FY09
------------------------------------------------------------------------------------------
Incremental Superstores....................     5     13-17         21-23      0-2    39-47
Relocated Superstores......................     -      6-7           0-1        -      6-8
                                             -----------------------------------------------
Total Superstore openings..................     5     19-24         21-24      0-2    45-55
                                           ================================================

(a) First quarter openings are actual.  In February 2008, we closed one store in
advance of opening a replacement store in the second quarter of fiscal 2009. The
replacement  store is included in  relocations  for the second quarter of fiscal
2009.

FORWARD-LOOKING STATEMENTS

The provisions of the Private  Securities  Litigation Reform Act of 1995 provide
companies  with a "safe  harbor" when making  forward-looking  statements.  This
"safe harbor"  encourages  companies to provide  prospective  information  about
their  companies  without fear of  litigation.  We wish to take advantage of the
"safe harbor"  provisions  of the Act. Our  statements  that are not  historical
facts, including statements about management's  expectations for fiscal 2009 and
beyond,   are   forward-looking   statements  and  involve   various  risks  and
uncertainties. In most cases, you can identify our forward-looking statements by
words such as "expect," "anticipate," "believe," "should," "may," "plan," "will"
or similar words.

Forward-looking statements are estimates and projections reflecting our judgment
and involve a number of risks and uncertainties  that could cause actual results
to differ  materially  from those suggested by the  forward-looking  statements.
Although  we  believe  that  the  estimates  and  projections  reflected  in the
forward-looking  statements are  reasonable,  our  expectations  may prove to be
incorrect. The retail industry and the specialty retail industry, in particular,
are dynamic by nature and have  undergone  significant  changes in recent years.
Our ability to anticipate and successfully respond to the continuing  challenges
of our industry is key to achieving  our  expectations.  Important  factors that
could cause actual  results to differ  materially  from estimates or projections
contained in our forward-looking statements include the following:

o    changes in the amount and degree of  competition,  pricing and  promotional
     pressure exerted by current  competitors and potential new competition from
     competitors  using  either  similar or  alternative  methods or channels of
     distribution  such as the Internet,  telephone  shopping  services and mail
     order;

o    our response to pricing and promotional activities of our competitors;

o    the  successful  implementation  of our  initiatives  to  accelerate  sales
     growth, gross margin improvement and expense reductions;

o    our  ability  to reduce  our  overall  cost and  expense  structure  and to
     maintain cost reductions while continuing to grow sales;

o    our ability to control and leverage expenses as a percentage of sales;

o    changes in general  economic  conditions  including,  but not  limited  to,
     financial market performance, consumer credit availability, interest rates,
     inflation, energy prices, personal discretionary spending


                                 Page 25 of 32


     levels,  trends in  consumer  retail  spending  (both in general and in our
     product categories),  unemployment and consumer sentiment about the economy
     in general;

o    the level of consumer  response to new products or product  features in the
     merchandise categories we sell and changes in our merchandise sales mix;

o    the pace of commoditization of digital products;

o    the  impact  of  inventory  and  supply  chain  management  initiatives  on
     inventory levels and profitability;

o    our ability to generate sales and margin growth through  expanded  services
     offerings;

o    the impact of new products and product  features on the demand for existing
     products and the pricing and profit margins associated with the products we
     sell;

o    significant changes in retail prices for products and services we sell;

o    changes in  availability  or cost of  financing  for  working  capital  and
     capital  expenditures,  including  financing to support  development of our
     business;

o    the lack of  availability  or access to sources of inventory or the loss or
     disruption in supply from one of our major suppliers;

o    the impact of a significant change in the relationships with key vendors;

o    our  inability  to  liquidate  excess  inventory  should  excess  inventory
     develop;

o    our inability to maintain sales and profitability  improvement programs for
     our Circuit City Superstores, including our store revitalization plan;

o    our ability to continue to generate  strong sales growth through our direct
     sales channel;

o    the  availability of appropriate  real estate locations for relocations and
     new stores;

o    the cost and timeliness of new store openings and relocations;

o    consumer  reaction to new store  locations  and changes in our store design
     and merchandise;

o    our ability and the ability of Chase Card Services to  successfully  market
     and promote the third party credit card program being offered by Chase Card
     Services;

o    the extent to which customers  respond to promotional  financing offers and
     the types of promotional terms we offer;

o    our ability to attract and retain an effective  management  team or changes
     in the costs or availability of a suitable work force to manage and support
     our service-driven operating strategies;

o    the impact of our wage  management  initiative on associate  morale and our
     reputation with customers;

o    the impact of initiatives related to upgrading merchandising, marketing and
     information   systems  on  revenue  and  operating  margin  and  the  costs
     associated with these investments;

o    changes in production or  distribution  costs or costs of materials for our
     advertising;

o    effectiveness  of our  advertising  and marketing  programs for  increasing
     consumer traffic and sales;

o    the imposition of new  restrictions  or  regulations  regarding the sale of
     products  and/or  services  we sell,  changes in tax rules and  regulations
     applicable to the imposition of new environmental restrictions, regulations
     or laws or the discovery of  environmental  conditions at current or future
     locations, or any failure to comply with such laws or any adverse change in
     such laws;

o    the impact of any strategic alternatives that we may pursue;

o    the outcome of our review of strategic  alternatives for our  international
     segment;

o    deterioration  of the  expected  future  performance  of our  international
     segment, resulting in an additional goodwill impairment charge;



                                 Page 26 of 32


o    the timely  production and delivery of private-label  merchandise and level
     of consumer demand for those products;

o    reduced investment returns or other changes relative to the assumptions for
     our pension plans that impact our pension expense;

o    the  availability of sources of liquidity to fund capital  expenditures and
     working capital;

o    changes in our anticipated cash flow and liquidity;

o    whether,  when and in what amounts share  repurchases may be made under our
     stock buyback program;

o    adverse results in litigation matters;

o    currency exchange rate  fluctuations  between Canadian and U.S. dollars and
     other currencies;

o    the global regulatory and trade environment;

o    the disruption of global, national or regional transportation systems;

o    the  occurrence of severe  weather  events or natural  disasters that could
     significantly damage or destroy stores or prohibit consumers from traveling
     to our retail locations, especially during peak selling periods; and

o    the successful  execution of the  initiatives to achieve revenue growth and
     increase  gross profit  margin  underlying  our  projected  2009 results as
     discussed under "Financial Outlook" in MD&A.

We  believe  our  forward-looking  statements  are  reasonable.  However,  undue
reliance should not be placed on forward-looking statements,  which are based on
current expectations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are  exposed  to market  risk from  potential  changes  in the  U.S./Canadian
currency  exchange  rates  as  they  relate  to  inventory   purchases  and  the
translation of our international segment's financial results.

Inventory Purchases

A portion of  InterTAN's  purchases are from vendors  requiring  payment in U.S.
dollars. Accordingly,  there is risk that the value of the Canadian dollar could
fluctuate  relative to the U.S. dollar from the time the goods are ordered until
payment is made.  InterTAN's  management  monitors  the  foreign  exchange  risk
associated  with its U.S. dollar open orders on a regular basis by reviewing the
amount of such open  orders;  exchange  rates,  including  forecasts  from major
financial institutions; local news; and other economic factors. At May 31, 2008,
U.S.  dollar open purchase  orders totaled  approximately  $12.5  million.  A 10
percent  decline in the value of the Canadian dollar would result in an increase
in product cost of approximately  $1.3 million for those orders. The incremental
cost of such a decline in currency  values,  if incurred,  would be reflected in
higher cost of sales in future periods. In these circumstances, management would
take product pricing action, to the degree commercially feasible.

Translation of Financial Results

Because we translate a portion of our international  segment's financial results
from Canadian dollars to U.S. dollars, fluctuations in the value of the Canadian
dollar have a direct effect on reported  consolidated  results.  We do not hedge
against the  possible  impact of this risk. A 10 percent  adverse  change in the
foreign  currency  exchange  rate  would  not have a  significant  impact on our
consolidated results of operations or financial position.


                                 Page 27 of 32


ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the  participation  of the company's  management,
including the chief executive officer and chief financial  officer,  the company
has evaluated the effectiveness of its "disclosure  controls and procedures," as
that term is defined in Rule 13a-15(e) of the  Securities  Exchange Act of 1934,
as amended, as of the end of the period covered by this quarterly report on Form
10-Q. Based upon the evaluation, the chief executive officer and chief financial
officer  concluded that the company's  disclosure  controls and procedures  were
effective as of May 31, 2008.

Changes in Internal Control over Financial Reporting

There were no changes in the company's internal control over financial reporting
that  occurred  during the  quarter  ended May 31,  2008,  that have  materially
affected,  or are reasonably likely to materially affect, the company's internal
control over financial reporting.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Except  as  described  in our  annual  report  on Form  10-K for the year  ended
February 29, 2008, there are no material pending legal  proceedings to which we,
including our subsidiaries, are a party or of which our property is the subject.

ITEM 1A. RISK FACTORS

In  addition  to the other  information  set forth in this  report,  you  should
carefully  consider the factors  discussed in Part I, "Item 1A. Risk Factors" in
our annual report on Form 10-K for the year ended February 29, 2008, which could
materially  affect our business,  financial  condition or future results.  There
have been no material  changes to those risk  factors  since we filed our fiscal
2008 annual  report on Form 10-K.  The risks  described in our annual  report on
Form  10-K are not the only  risks  facing  our  company.  Additional  risks and
uncertainties  not  currently  known  to us or  that  we  currently  deem  to be
immaterial  also  may  materially  adversely  affect  our  business,   financial
condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information about common stock repurchases by or on
behalf of the company during the quarter ended May 31, 2008:


                                                                                                                    Approximate
                                                                                                                    Dollar Value of
                                                                                                Total Number         Shares that
                                                                                                 of Shares            May Yet Be
                                                        Total Number          Average           Purchased as           Purchased
                                                         of Shares             Price          Part of Publicly           Under
                                                        Purchased(a)           Paid              Announced           the Program(b)
                                                      (in thousands)        per Share(a)         Program             (in millions)
---------------------------------------------------------------------------------------------------------------------------------
March 1 - March 31, 2008.........................           2.6                $4.42                  -                  $233.7
April 1 - April 30, 2008.........................           1.6                $4.45                  -                  $233.7
May 1 - May 31, 2008.............................           3.4                $5.04                  -                  $233.7
                                                       ------------                              -----------

Total fiscal 2009 first quarter..................           7.6                $4.70                  -
                                                       ============                              ===========

(a) These columns reflect shares of common stock withheld to pay tax withholding
obligations for employees in connection with the vesting of stock awards.  These
shares are not considered part of the share repurchase  program described in (b)
below.


                                 Page 28 of 32


(b) In January  2003,  the company  announced  that the board of  directors  had
authorized the  repurchase of up to $200 million of common stock.  In June 2004,
the  company   announced  a  $200  million  increase  in  its  stock  repurchase
authorization,  raising the repurchase  capacity to $400 million. In March 2005,
the  company   announced  a  $400  million  increase  in  its  stock  repurchase
authorization,  raising the repurchase  capacity to $800 million.  In June 2006,
the  company   announced  a  $400  million  increase  in  its  stock  repurchase
authorization,  raising the  repurchase  capacity to $1.2  billion.  There is no
expiration  date  under  the  authorization.  At May 31,  2008,  $233.7  million
remained available for stock repurchases under the $1.2 billion stock repurchase
authorization.


                                 Page 29 of 32


ITEM 6.       EXHIBITS

Articles of Incorporation and Bylaws

3.1  Circuit City Stores,  Inc. Amended and Restated  Articles of Incorporation,
     effective  February 3, 1997, as amended  through August 16, 2005,  filed as
     Exhibit 3.1 to the company's Form 8-A/A filed  September 13, 2005 (File No.
     1-5767), are expressly incorporated herein by this reference.

3.2  Circuit City Stores, Inc. Bylaws, as amended June 24, 2008.

Material Contracts

10.1 Settlement  Agreement  dated  May 8,  2008  by and  among  Wattles  Capital
     Management,  LLC, Mark J. Wattles,  James A. Marcum,  Elliott Wahle, Don R.
     Kornstein,  Anthony  Bergamo and Alexander M. Bond and Circuit City Stores,
     Inc.,  filed as Exhibit 10.1 to the  company's  Current  Report on Form 8-K
     filed May 9, 2008 (File No. 1-5767),  is expressly  incorporated  herein by
     this reference.

Rule 13a-14(a)/15d-14(a) Certifications

31.1 Certification of CEO under Rule 13a-14(a) of the Securities Exchange Act of
     1934

31.2 Certification of CFO under Rule 13a-14(a) of the Securities Exchange Act of
     1934

Section 1350 Certifications

32.1 Certification of CEO under Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of CFO under Section 906 of the Sarbanes-Oxley Act of 2002


                                 Page 30 of 32


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                                 CIRCUIT CITY STORES, INC.
                                                 (Registrant)



Date:  June 30, 2008                             By:   /s/ Philip J. Schoonover
                                                       --------------------------------------
                                                       Philip J. Schoonover
                                                       Chairman, President and Chief Executive Officer
                                                       and Director


Date:  June 30, 2008                             By:   /s/ Bruce H. Besanko
                                                       --------------------------------------
                                                       Bruce H. Besanko
                                                       Executive Vice President and
                                                       Chief Financial Officer


                                 Page 31 of 32


                                  EXHIBIT INDEX

Articles of Incorporation and Bylaws

3.1  Circuit City Stores,  Inc. Amended and Restated  Articles of Incorporation,
     effective  February 3, 1997, as amended  through August 16, 2005,  filed as
     Exhibit 3.1 to the company's Form 8-A/A filed  September 13, 2005 (File No.
     1-5767), are expressly incorporated herein by this reference.

3.2  Circuit City Stores, Inc. Bylaws, as amended June 24, 2008.

 Material Contracts

10.1 Settlement  Agreement  dated  May 8,  2008  by and  among  Wattles  Capital
     Management,  LLC, Mark J. Wattles,  James A. Marcum,  Elliott Wahle, Don R.
     Kornstein,  Anthony  Bergamo and Alexander M. Bond and Circuit City Stores,
     Inc.,  filed as Exhibit 10.1 to the  company's  Current  Report on Form 8-K
     filed May 9, 2008 (File No. 1-5767),  is expressly  incorporated  herein by
     this reference.

Rule 13a-14(a)/15d-14(a) Certifications

31.1 Certification of CEO under Rule 13a-14(a) of the Securities Exchange Act of
     1934

31.2 Certification of CFO under Rule 13a-14(a) of the Securities Exchange Act of
     1934

Section 1350 Certifications

32.1 Certification of CEO under Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of CFO under Section 906 of the Sarbanes-Oxley Act of 2002

                                 Page 32 of 32