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 August 31, 2007
                                       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 of Incorporation)                   (I.R.S. Employer 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, or a  non-accelerated  filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |X| Accelerated filer __ Non-accelerated filer __

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 registrant's classes of
common stock, as of the latest practicable date.

            Class                              Outstanding at September 30, 2007
 Common Stock, par value $0.50                            168,560,316

A Table of Contents  is  included on Page 2 and an Exhibit  Index is included on
Page 32.



                            CIRCUIT CITY STORES, INC.

                                TABLE OF CONTENTS



PART I.  FINANCIAL INFORMATION

      Item 1.     Financial Statements:

                     Consolidated Statements of Operations -
                     Three Months and Six Months Ended August 31, 2007 and 2006            3

                     Consolidated Balance Sheets -
                     August 31, 2007, and February 28, 2007                                4

                     Consolidated Statements of Cash Flows -
                     Six Months Ended August 31, 2007 and 2006                             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              28

      Item 4.     Controls and Procedures                                                 28

PART II.          OTHER INFORMATION

      Item 1.     Legal Proceedings                                                       29

      Item 1A.    Risk Factors                                                            29

      Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds             29

      Item 4.     Submission of Matters to a Vote of Security Holders                     30

      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                    Six Months Ended
                                                                      August 31                            August 31
                                                              2007               2006                2007             2006
                                                           ------------      ------------       ------------      -------------
Net sales                                                    $2,643,968         $2,818,498        $5,129,505         $5,415,113
Cost of sales, buying and warehousing                         2,097,957          2,148,355         4,023,309          4,109,206
                                                           ------------      -------------      ------------      -------------
Gross profit                                                    546,011            670,143         1,106,196          1,305,907
Selling, general and administrative expenses                    677,909            656,670         1,326,263          1,290,962
                                                           ------------      -------------      ------------      -------------
Operating (loss) income                                        (131,898)            13,473          (220,067)            14,945
Interest income                                                   3,858              5,794             9,595             12,840
Interest expense                                                    124                113               167                325
                                                           ------------      -------------      ------------      -------------
(Loss) earnings from continuing operations
     before income taxes                                       (128,164)            19,154          (210,639)            27,460
Income tax (benefit) expense                                    (65,110)             7,499           (92,773)            10,498
                                                           ------------      -------------      ------------      -------------
Net (loss) earnings from continuing operations                  (63,054)            11,655          (117,866)            16,962
Earnings (loss) from discontinued
    operations, net of tax                                          218             (1,614)              464             (2,322)
Cumulative effect of change in accounting
    principle, net of tax                                             -                  -                 -              1,773
                                                           ------------      -------------      ------------      -------------
Net (loss) earnings                                        $    (62,836)     $      10,041      $   (117,402)     $      16,413
                                                           ============      =============      ============      =============

Weighted average common shares:
    Basic                                                       164,837            169,973           165,340            170,514
    Diluted                                                     164,837            174,659           165,340            175,458

(Loss) earnings per share:
    Basic:
       Continuing operations                               $     (0.38)      $       0.07       $      (0.71)     $       0.10
       Discontinued operations                             $         -       $      (0.01)      $          -      $      (0.01)
       Cumulative effect of change in
           accounting principle                            $         -       $          -       $          -      $       0.01
       Basic (loss) earnings per share                     $     (0.38)      $       0.06       $      (0.71)     $       0.10

    Diluted:
       Continuing operations                               $     (0.38)      $       0.07       $      (0.71)     $       0.10
       Discontinued operations                             $         -       $      (0.01)      $          -      $      (0.01)
       Cumulative effect of change in
           accounting principle                            $         -       $          -       $          -      $       0.01
       Diluted (loss) earnings per share                   $     (0.38)      $       0.06       $      (0.71)     $       0.09


    Cash dividends paid per share                          $       0.04      $     0.0175       $       0.08      $     0.0350

See accompanying notes to consolidated financial statements.


                                  Page 3 of 32


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

                                                                                        August 31, 2007        Feb. 28, 2007
                                                                                          (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                                                               $      130,899        $     141,141
Short-term investments                                                                         293,503              598,341
Accounts receivable, net of allowance for doubtful accounts                                    304,957              382,555
Merchandise inventory                                                                        1,833,226            1,636,507
Deferred income taxes                                                                          107,187               34,868
Income tax receivable                                                                          103,476               42,722
Prepaid expenses and other current assets                                                       73,884               47,378
                                                                                        --------------        -------------

Total current assets                                                                         2,847,132            2,883,512

Property and equipment, net of accumulated depreciation of
     $1,381,058 and $1,300,267                                                                 974,421              921,027
Deferred income taxes                                                                           26,613               31,910
Goodwill                                                                                       134,863              121,774
Other intangible assets, net of accumulated amortization of
     $18,192 and $14,179                                                                        18,846               19,285
Other assets                                                                                    35,633               29,775
                                                                                        --------------        -------------

TOTAL ASSETS                                                                            $    4,037,508        $   4,007,283
                                                                                        ==============        =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Merchandise payable                                                                     $    1,110,223        $     922,205
Expenses payable                                                                               293,192              281,709
Accrued expenses and other current liabilities                                                 359,482              404,444
Accrued compensation                                                                            69,723               98,509
Accrued income taxes                                                                            21,136                    -
Current installments of long-term debt                                                           8,272                7,162
                                                                                        --------------        -------------

Total current liabilities                                                                    1,862,028            1,714,029

Long-term debt, excluding current installments                                                  50,710               50,487
Accrued straight-line rent and deferred rent credits                                           283,679              277,636
Accrued lease termination costs                                                                 68,967               76,326
Other liabilities                                                                              135,075               97,561
                                                                                        --------------        -------------

TOTAL LIABILITIES                                                                            2,400,459            2,216,039
                                                                                        --------------        -------------
Commitments and contingent liabilities

Stockholders' equity:
Common stock, $0.50 par value;
     525,000,000 shares authorized; 168,586,908 shares
     issued and outstanding at August 31, 2007
     (170,689,406 at February 28, 2007)                                                        84,293                85,345
Additional paid-in capital                                                                    310,991               344,144
Retained earnings                                                                           1,196,982             1,336,317
Accumulated other comprehensive income                                                         44,783                25,438
                                                                                        -------------         -------------

TOTAL STOCKHOLDERS' EQUITY                                                                  1,637,049             1,791,244
                                                                                        -------------         -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                              $   4,037,508         $   4,007,283
                                                                                        =============         =============
See accompanying notes to consolidated financial statements.


                                  Page 4 of 32


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

                                                                                                  Six Months Ended
                                                                                                      August 31
                                                                                              2007                  2006
                                                                                         -------------         ------------
Operating Activities:
Net (loss) earnings                                                                      $   (117,402)         $     16,413
Adjustments to reconcile net (loss) earnings to net cash
      used in operating activities of continuing operations:
       Net (earnings) loss from discontinued operations                                          (464)                2,322
       Depreciation expense                                                                    96,089                86,308
       Amortization expense                                                                     2,403                 1,843
       Stock-based compensation expense                                                        12,290                16,393
       Loss on dispositions of property and equipment                                             483                   618
       Provision for deferred income taxes                                                    (72,478)              (11,912)
       Cumulative effect of change in accounting principle                                          -                (1,773)
       Other                                                                                    1,018                   943
    Changes in operating assets and liabilities:
       Accounts receivable, net                                                                55,785               (65,909)
       Merchandise inventory                                                                 (185,180)             (148,105)
       Prepaid expenses and other current assets                                              (26,835)              (19,513)
       Other assets                                                                             1,144                   559
       Merchandise payable                                                                    182,887               130,835
       Expenses payable                                                                        19,158                45,561
       Accrued expenses, other current liabilities and income taxes                          (131,279)             (115,806)
       Other long-term liabilities                                                             29,067                (8,098)
                                                                                         ------------          ------------
Net cash used in operating activities of continuing operations                               (133,314)              (69,321)
                                                                                         -------------         ------------

Investing Activities:
Purchases of property and equipment                                                          (148,161)             (113,449)
Proceeds from sales of property and equipment                                                  23,407                10,524
Purchases of investment securities                                                         (1,169,510)             (284,190)
Sales and maturities of investment securities                                               1,474,360               502,213
Other investing activities                                                                     (1,691)               (9,864)
                                                                                         ------------          ------------
Net cash provided by investing activities of continuing operations                            178,405               105,234
                                                                                         ------------          ------------

Financing Activities:
Proceeds from short-term borrowings                                                             4,515                26,749
Principal payments on short-term borrowings                                                    (4,747)              (17,774)
Principal payments on long-term debt                                                           (3,756)               (4,230)
Change in overdraft balances                                                                   (9,340)               18,089
Excess tax benefit from stock-based payments                                                      928                11,105
Repurchases of common stock                                                                   (46,757)             (117,129)
Issuances of common stock                                                                       4,722                38,453
Dividends paid                                                                                (13,490)               (6,156)
Other financing activities                                                                     (1,127)                    -
                                                                                         ------------          ------------
Net cash used in financing activities of continuing operations                                (69,052)              (50,893)
                                                                                         -------------         ------------

Discontinued Operations:
Operating cash flows                                                                           12,233                (4,812)
Investing cash flows                                                                                -                   (26)
Financing cash flows                                                                              (58)                    -
                                                                                         ------------          ------------
Net cash provided by (used in) discontinued operations                                         12,175                (4,838)
                                                                                         ------------          ------------
Effect of exchange rate changes on cash                                                         1,544                   (22)
                                                                                         -------------         ------------

Decrease in cash and cash equivalents                                                         (10,242)              (19,840)
Cash and cash equivalents at beginning of year                                                141,141               315,970
                                                                                         -------------         ------------
Cash and cash equivalents at end of period                                               $    130,899          $    296,130
                                                                                         =============         ============

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

     Description of Business:  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
     consumer  electronics,  personal  computers,  entertainment  software,  and
     related  services in Circuit  City stores in the United  States and via the
     Web at  www.circuitcity.com  and  www.firedog.com.  At August 31, 2007, the
     company's  domestic segment operated 652 Superstores and 13 other 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  August  31,  2007,  the
     international  segment  conducted  business  through 800 retail  stores and
     dealer outlets,  which consisted of 508  company-owned  stores,  291 dealer
     outlets,  and 1 Battery  Plus(R)  store.  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.  The company is continuing to explore its strategic options,
     but does not expect any  decisions  regarding  InterTAN will occur prior to
     January 2008.

     Effective  January 28,  2007,  the company  returned the  management  of 92
     Rogers  Plus(R)  stores to Rogers  Wireless  Inc.  in  accordance  with the
     Amending  Agreement dated March 27, 2004,  between Rogers Wireless Inc. and
     InterTAN  Canada Ltd.  Results from the Rogers Plus(R) stores are presented
     as results from discontinued operations in all periods presented.

     The  company  closed a  domestic  segment  operation  in  fiscal  2007 that
     previously  had  been  held for  sale.  Results  from  this  operation  are
     presented as results from discontinued operations in all periods presented.

     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  those   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 2007 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

     In June 2006,  the  Financial  Accounting  Standards  Board  (FASB)  issued
     Interpretation  No. 48,  "Accounting  for  Uncertainty in Income Taxes - an
     interpretation of FASB Statement No. 109" (FIN 48).


                                  Page 6 of 32


     FIN 48 prescribes a recognition threshold and measurement attribute for the
     financial statement  recognition and measurement of a tax position taken or
     expected to be taken in a tax return.  This  Interpretation  also  provides
     guidance  on   derecognition,   classification,   interest  and  penalties,
     accounting  in interim  periods,  disclosure  and  transition.  The company
     adopted FIN 48 on March 1, 2007.  Additional  discussion  and the impact of
     adopting this Interpretation are included in Note 4, Income Taxes.

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements."
     SFAS No. 157 defines fair value, establishes a framework for measuring fair
     value and requires  additional  disclosures about fair value  measurements.
     The provisions of SFAS No. 157 will be effective for the company  beginning
     with the first quarter of fiscal 2009.  The company has not yet  determined
     the impact of adopting this standard.

     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.  SFAS No. 159 will be effective for the company
     beginning  with the first  quarter of fiscal 2009.  The company has not yet
     determined the impact of adopting this standard.

3.   (Loss) Earnings Per Share

     The following table presents a reconciliation  of the denominators  used in
     the (loss) earnings per share calculations.

                                                                       Three Months Ended                   Six Months Ended
                                                                            August 31                           August 31
     (Shares in millions)                                             2007            2006               2007            2006
     -----------------------------------------------------------------------------------------           -----------------------
     Weighted average common shares.............................      164.8           170.0               165.3           170.5
     Potentially dilutive common equivalent shares:
         Options................................................          -             3.2                   -             3.5
         Nonvested stock and nonvested stock units..............          -             1.5                   -             1.5
                                                                     -------------------------           -----------------------
     Weighted average common shares and potentially
         dilutive common equivalent shares......................      164.8           174.7               165.3           175.5
                                                                     =========================           =======================

     For the three months and six months  ended  August 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. For the
     three  months and six months  ended August 31,  2006,  the  computation  of
     potentially  dilutive common  equivalent shares excluded certain options to
     purchase  shares of common stock  because the exercise  prices were greater
     than the average  market  price of the common  shares and,  therefore,  the
     effect would be anti-dilutive. Shares excluded were as follows:

                                                                          Three Months Ended                Six Months Ended
                                                                               August 31                        August 31
     (Shares in millions)                                               2007            2006             2007            2006
     ------------------------------------------------------------------------------------------          --------------------
     Options......................................................        7.7              1.1             8.1            1.1
     Nonvested stock..............................................        4.0                -             4.0              -

4.   Income Taxes

     The  consolidated  effective  income tax rate  applicable  to results  from
     continuing  operations was 44.0 percent for the six months ended August 31,
     2007,  and 38.2  percent  for the six months  ended  August 31,  2006.  The
     increase  in the  effective  tax  rate  is the  result  of an  increase  in
     projected  tax-exempt  investment  income in  proportion  to the  projected
     full-year net loss from continuing  operations.  The increase was partially
     offset by the recognition of a valuation  allowance of $0.7 million related
     to the  international  segment.  The  valuation  allowance was related to a
     capital loss carryforward.


                                  Page 7 of 32


     On March 1,  2007,  the  company  adopted  the  provisions  of FIN 48. As a
     result, the company decreased  retained earnings by $8.4 million.  At March
     1, 2007, the company had  unrecognized  tax benefits of $38.4  million,  of
     which $17.6  million  would reduce the  effective tax rate if recognized in
     future  periods.  At March 1,  2007,  the  company  anticipated  that total
     unrecognized  tax benefits  would decrease by  approximately  $6 million by
     February 29, 2008, as a result of the settlement of state tax uncertainties
     and the expiration of the statute of limitations in several jurisdictions.

     In  conjunction  with the  adoption of FIN 48, the  company has  classified
     unrecognized  tax  benefits not expected to be settled in one year as other
     liabilities on the  consolidated  balance sheet. It is the company's policy
     to  account  for  interest  and  penalties  as a  component  of income  tax
     (benefit)  expense.  The total amount of accrued interest at March 1, 2007,
     was $15.3 million. There were no accrued penalties.

     The Internal  Revenue  Service ("IRS") has completed its examination of the
     company's  federal income tax returns for fiscal years 2001, 2002 and 2003.
     All issues  relating to these years have been resolved,  but the statute of
     limitations remains open for these years as a result of waivers. The IRS is
     currently  examining  the company's  fiscal 2004,  2005 and 2006 income tax
     returns.  With  limited  exceptions,  the  company is no longer  subject to
     federal,  state, or local income tax  examinations  for fiscal years before
     2001. The statute of  limitations  for the Canadian tax returns is open for
     fiscal 2002 to the present.

     During the six months  ended  August 31, 2007,  the company  decreased  its
     unrecognized  tax  benefits by $3.3  million,  of which $2.1  million was a
     result of the resolution of the IRS audit of fiscal year 2003. In addition,
     the company accrued interest of $0.6 million  associated with its uncertain
     tax positions.

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.  The  calculation of accrued lease  termination  costs includes
     future minimum lease payments,  taxes, insurance and maintenance costs from
     the date of closure to the end of the remaining lease term. The calculation
     also  includes   estimated  sublease  income,  net  of  tenant  improvement
     allowances  and broker fees. The liability for lease  termination  costs is
     discounted using a credit-adjusted  risk-free rate of interest. The company
     evaluates  these   assumptions  each  quarter  and  adjusts  the  liability
     accordingly.

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

                                                                                           Six Months Ended
                                                                                                August 31
     (Amounts in millions)                                                                2007             2006
     ----------------------------------------------------------------------------------------------------------
     Accrued lease termination costs at beginning of period......................       $105.6            $110.0
     Provisions for closed locations.............................................          4.2               1.2
     Changes in assumptions about future sublease income and
         terminations............................................................          5.3               4.1
     Interest accretion..........................................................          4.0               4.6
     Cash payments, net of cash received on subleased locations..................        (19.9)            (16.7)
                                                                                      --------------------------
     Accrued lease termination costs at end of period............................         99.2             103.2
     Less current portion of accrued lease termination costs.....................         30.2              30.3
                                                                                      --------------------------
     Non-current portion of accrued lease termination costs......................     $   69.0           $  72.9
                                                                                      ==========================


     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.

     During the second quarter of fiscal 2008, the company made cash payments of
     $8.3 million and recorded an additional  accrual of $2.4 million related to
     severance arrangements.  At August 31, 2007, accrued severance totaled $8.8
     million and is included in accrued compensation on the consolidated balance
     sheet.


                                  Page 8 of 32


6.   Stock-Based Compensation

     Under  the  company's  stock-based  incentive  plans,   nonqualified  stock
     options,  nonvested  stock,  nonvested  stock units and other  equity-based
     awards  may be  granted  to  management,  key  employees  and  non-employee
     directors.  At August 31,  2007,  4.2 million  shares of common  stock were
     available for future grants of options,  nonvested stock or nonvested stock
     units. Upon the exercise of stock options, the grant of nonvested stock, or
     the vesting of or lapse of deferral  restrictions on nonvested stock units,
     common shares are issued from authorized and unissued shares.

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

                                                                        Three Months Ended                  Six Months Ended
                                                                             August 31                          August 31
     (Amounts in millions)                                             2007           2006                2007            2006
     -----------------------------------------------------------------------------------------           ----------------------
     Compensation expense recognized:
        Stock options...........................................       $2.3            $2.6               $ 5.0           $ 7.0
        Nonvested stock and nonvested stock units...............        5.0             5.1                 7.3             9.3
        Phantom stock units.....................................       (0.5)            0.1                (0.6)            1.2
        Employee stock purchase plan............................        0.1             0.2                 0.3             0.4
        Other...................................................        0.1               -                 0.1             0.1
                                                                      ------------------------           ----------------------
             Total compensation expense recognized..............       $7.0            $8.0               $12.1           $18.0
                                                                      ========================            =====================
     Tax benefit recognized.....................................       $2.5            $2.8               $ 4.4           $ 6.1

     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                  Six Months Ended
                                                                             August 31                          August 31
     (Amounts in millions)                                             2007           2006               2007            2006
     -----------------------------------------------------------------------------------------           ----------------------
     Cost of sales, buying and warehousing......................       $1.3            $1.4               $ 1.9           $ 2.7
     Selling, general and administrative expenses...............        5.7             6.6                10.2            15.3
                                                                      ------------------------           ----------------------
     Total compensation expense recognized......................       $7.0            $8.0               $12.1           $18.0
                                                                      ========================            =====================

     The company recognizes stock-based compensation expense net of an estimated
     forfeiture rate based on historical  forfeiture activity.  During the first
     quarter of fiscal 2008, 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.

     The value of each  phantom  stock unit is based on the market  value of one
     share of common stock on the vesting date. The units, which will be settled
     in cash upon vesting,  are  remeasured at each  reporting  date. Due to the
     decrease in the market value of the  company's  common  stock,  the company
     recorded a benefit of $0.6  million  related to phantom  stock units in the
     six months ended August 31, 2007.

     The fair value of each option  granted is estimated on the grant date using
     the  Black-Scholes  option  valuation  model  with the  following  weighted
     average assumptions:

                                                                         Six Months Ended
                                                                             August 31
                                                                       2007           2006
     ----------------------------------------------------------------------------------------
     Expected dividend yield....................................        1.3%            0.3%
     Expected stock volatility..................................         44%             61%
     Risk-free interest rate....................................          5%              5%
     Expected term (in years)...................................          5               7


                                  Page 9 of 32


     During the six months  ended  August 31,  2006, a stock option grant with a
     vesting  period  of five  years  and a  contractual  term of ten  years was
     awarded. Due to the lack of historical exercise behavior for an option with
     similar  vesting  provisions,  the  company  used a  simplified  method  to
     estimate the expected term of the grant. An average of the award's weighted
     average vesting period and its contractual term was calculated and resulted
     in an expected term of seven years.

     Using these  assumptions in the  Black-Scholes  model, the weighted average
     grant date fair value of  options  granted  was $5.20 per share for the six
     months  ended August 31, 2007 and $14.94 per share for the six months ended
     August 31, 2006.

     The company's stock option activity is summarized in the table below.

                                                                                                 Weighted
                                                                                                  Average
                                                                               Weighted          Remaining            Aggregate
                                                             Shares             Average      Contractual Term      Intrinsic Value
                                                         (in thousands)     Exercise Price      (in years)          (in millions)
     ------------------------------------------------------------------------------------------------------------------------------
     Outstanding at February 28, 2007...................      8,749             $18.16
     Granted............................................        207             $12.59
     Exercised..........................................       (436)            $10.70
     Forfeited or expired...............................       (993)            $26.90
                                                             ------
     Outstanding at August 31, 2007.....................      7,527             $17.28                5.1                $4.3
     Exercisable at August 31, 2007.....................      5,179             $15.95                3.7                $4.3

     As of August  31,  2007,  the  total  remaining  unrecognized  compensation
     expense related to unvested stock options was $19.5 million and is expected
     to be recognized over a weighted average period of 2.8 years.

     The  company's  nonvested  stock  and  nonvested  stock  unit  activity  is
     summarized in the table below.

                                                                            Weighted Average         Aggregate
                                                             Shares            Grant Date         Intrinsic Value
                                                         (in thousands)        Fair Value          (in millions)
     ------------------------------------------------------------------------------------------------------------
     Nonvested at February 28, 2007....................       3,975              $19.63
     Granted...........................................         663              $14.28
     Vested............................................        (146)             $19.51
     Forfeited.........................................        (407)             $19.58
                                                             ------
     Nonvested at August 31, 2007......................       4,085              $18.74                $44.4

     Total  unrecognized  compensation  expense  related to nonvested  stock and
     nonvested stock units at August 31, 2007, was $36.6 million and is expected
     to be recognized over a weighted average period of 1.9 years.

7.   Comprehensive (Loss) Income

     The components of the company's  comprehensive (loss) income consist of net
     (loss) earnings and other comprehensive  income. Other comprehensive income
     is comprised primarily of foreign currency translation  adjustments related
     to the international  segment but also includes unrealized gains and losses
     on   available-for-sale   securities   and   pension   adjustments.   Other
     comprehensive income is recorded net of deferred income taxes directly as a
     component of stockholders' equity.


                                 Page 10 of 32


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


                                                                       Three Months Ended                 Six Months Ended
                                                                            August 31                         August 31
     (Amounts in millions)                                            2007            2006              2007           2006
     ----------------------------------------------------------------------------------------       ---------------------------
     Net (loss) earnings.......................................      $(62.8)          $10.0           $(117.4)         $16.4
     Foreign currency translation..............................         2.6            (0.9)             19.2            6.8
     Other.....................................................         0.1               -               0.1              -
                                                                   --------------------------       ---------------------------
     Comprehensive (loss) income...............................      $(60.1)          $ 9.1           $ (98.1)         $23.2
                                                                   ==========================       ===========================

8.   Common Stock Repurchased

     The company's  board of directors has  authorized  the  repurchase of up to
     $1.2 billion of common stock, of which $233.7 million remained available at
     August 31, 2007. As of August 31, 2007,  the company had  repurchased  60.4
     million  shares of  common  stock at a cost of  $966.3  million,  excluding
     commission fees,  cumulatively  since the inception of the stock repurchase
     program.

     The company's stock repurchase activity for the three months and six months
     ended August 31, 2007, was as follows:

                                                                         Three Months Ended            Six Months Ended
     (Amounts in millions)                                                 August 31, 2007              August 31, 2007
     ------------------------------------------------------------------------------------------------------------------
     Total number of shares repurchased...........................               -                            2.5
     Cost, excluding commission fees..............................            $  -                           $46.7

9.   Pension Plans

     The  company's  domestic  segment  has a  noncontributory  defined  benefit
     pension plan that was frozen as of February 28, 2005,  except for employees
     who (i) were within  three years of their early  retirement  date or normal
     retirement date; (ii) had reached their early or normal retirement date; or
     (iii) were  permanently  disabled  before March 1, 2005.  As a result,  all
     employees  affected by the plan freeze retain any benefits  accumulated  to
     the effective date, but are no longer eligible to increase their benefit.

     The company also has 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  pension plan. The benefit  restoration plan was frozen
     as of February 28, 2005, and will provide benefits for participants who, as
     of that date, were within 10 years of attaining their early retirement date
     or normal retirement date.

     On December 22, 2005, the benefit restoration plan was amended to permit W.
     Alan  McCollough  to elect to  receive a  lump-sum  payment  following  his
     retirement,  allowing him to receive the maximum  benefit payable under the
     plan.  This lump-sum  payment  resulted in a loss due to settlement of $0.3
     million for the first half of fiscal 2007.


                                 Page 11 of 32


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

                                                                  Three Months Ended                   Six Months Ended
                                                                        August 31                          August 31
     (Amounts in thousands)                                      2007             2006               2007            2006
     -----------------------------------------------------------------------------------        ---------------------------
     Service cost...........................................     $   589         $   657          $  1,178          $ 1,435
     Interest cost.........................................        4,020           3,789             8,040            7,583
     Expected return on plan assets........................       (5,182)         (4,775)          (10,364)          (9,557)
     Recognized prior service cost.........................           53              54               107              108
     Recognized actuarial loss.............................          372             609               744            1,218
     Loss due to settlement................................            -             128                 -              319
                                                               -------------------------        ---------------------------
     Net pension (income) expense..........................      $  (148)        $   462          $   (296)         $ 1,106
                                                               =========================        ===========================

     The company did not make a contribution to the defined benefit pension plan
     during the six months ended August 31, 2007. No contributions  are required
     during fiscal 2008 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  29,  2008  exceeds  the
     accumulated benefit obligation.

     A  contribution  of $0.7  million,  which is equal to the expected  benefit
     payments for fiscal 2008,  is expected to be made to the  restoration  plan
     during fiscal 2008. Benefit payments during the six months ended August 31,
     2007, were $0.3 million.

10.  Discontinued Operations

     For the three months and six months  ended  August 31,  2007,  net earnings
     from discontinued  operations totaled $0.2 million and $0.5 million,  which
     are net of $0.1  million and $0.3  million of income  taxes,  respectively.
     These amounts  primarily  relate to the  operations  of the Rogers  Plus(R)
     stores,  of which the  management  was returned to Rogers  Wireless Inc. in
     January 2007.

     For the  quarter  ended  August 31,  2006,  the net loss from  discontinued
     operations  totaled  $1.6  million,  which is net of $0.6 million of income
     taxes,  and related to the  operations of the Rogers  Plus(R)  stores and a
     domestic  segment  operation  that was  closed  in fiscal  2007.  This $0.6
     million of income  tax  benefit  was  offset by $0.5  million of income tax
     expense  resulting  from a  revision  of  management's  estimate  regarding
     certain  tax  uncertainties  associated  with  the  company's  discontinued
     bankcard operation.

     For the six months ended August 31,  2006,  the net loss from  discontinued
     operations  totaled  $2.3  million,  which is net of $1.0 million of income
     taxes,  and related to the  operations of the Rogers  Plus(R)  stores and a
     domestic  segment  operation  that was  closed  in fiscal  2007.  This $1.0
     million of income  tax  benefit  was  offset by $0.5  million of income tax
     expense  associated with the company's  discontinued  bankcard operation as
     discussed above.

11.  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 engaged in the business of
     selling brand-name consumer electronics, personal computers,  entertainment
     software,  and related  services in the United  States.  The  international
     segment is engaged in the business of selling  private-label and brand-name
     consumer electronics in Canada.


                                 Page 12 of 32


     Net sales by reportable segment were as follows:

                                                                       Three Months Ended              Six Months Ended
                                                                            August 31                       August 31
     (Amounts in millions)                                            2007           2006              2007           2006
     ----------------------------------------------------------------------------------------      --------------------------
     Domestic segment..........................................     $2,511.4         $2,680.6         $4,888.3       $5,166.1
     International segment.....................................        132.5            137.9            241.2          249.0
                                                                 ----------------------------      --------------------------
     Net sales.................................................     $2,644.0         $2,818.5         $5,129.5       $5,415.1
                                                                 ============================      ==========================


     Net (loss) earnings from continuing  operations by reportable  segment were
     as follows:

                                                                       Three Months Ended              Six Months Ended
                                                                            August 31                       August 31
     (Amounts in millions)                                            2007           2006              2007             2006
     ----------------------------------------------------------------------------------------      -------------------------
     Domestic segment..........................................       $(63.2)           $10.5         $(120.6)         $19.8
     International segment.....................................          0.1              1.2             2.8           (2.8)
                                                                  ---------------------------      -------------------------
     Net (loss) earnings from continuing operations............       $(63.1)           $11.7         $(117.9)         $17.0
                                                                  ===========================      ==========================

     The international segment's net earnings from continuing operations for the
     first half of fiscal 2008 include $4.7  million,  after-tax,  of additional
     sales proceeds related to a former subsidiary.

     Total assets by reportable segment were as follows:

                                                                  At August 31        At February 28
     (Amounts in millions)                                            2007                 2007
     ------------------------------------------------------------------------------------------------
     Domestic segment.........................................      $3,677.2              $3,657.5
     International segment....................................         360.3                 349.8
                                                                  -----------------------------------
     Total assets.............................................      $4,037.5              $4,007.3
                                                                    =================================

     The domestic segment net sales by category were as follows:

                                                  Three Months Ended August 31                  Six Months Ended August 31
                                                 2007                  2006(a)                  2007                   2006(a)
                                                      % of                    % of                     % of                  % of
     (Dollar amounts in millions)              $      Sales          $        Sales          $         Sales        $         Sales
     -------------------------------------------------------------------------------   ---------------------------------------------
     Video..............................    $  948.2    37.8%     $1,067.5    39.8%       $1,882.2     38.5%     $2,099.3     40.6%
     Information technology.............       774.7    30.8         743.0    27.7         1,403.3     28.7       1,361.8     26.4
     Audio..............................       325.8    13.0         388.7    14.5           660.7     13.5         769.3     14.9
     Entertainment......................       267.1    10.6         242.1     9.1           539.7     11.1         500.9      9.7
     Warranty, services
         and other(b)...................       195.6     7.8         239.3     8.9           402.5      8.2         434.8      8.4
                                         -------------------------------------------   ---------------------------------------------
     Net sales..........................    $2,511.4   100.0%     $2,680.6   100.0%       $4,888.3    100.0%     $5,166.1    100.0%
                                         ==========================================    ============================================

     (a)  Reclassifications  have been made to  conform  with the  current  year
     presentation.  These include reclassifying sales from video and information
     technology to warranty, services and other.
     (b)  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.


                                 Page 13 of 32


     The international segment net sales by category were as follows:

                                                  Three Months Ended August 31                  Six Months Ended August 31
                                                 2007                 2006                     2007                   2006
                                                      % of                    % of                     % of                  % of
     (Dollar amounts in millions)              $      Sales          $        Sales          $         Sales        $         Sales
     -------------------------------------------------------------------------------   ---------------------------------------------
     Video..............................     $ 26.2   19.7%        $ 27.4     19.9%         $ 46.2     19.2%       $ 47.9     19.2%
     Information technology.............       46.6   35.2           53.0     38.4            86.4     35.7          97.6     39.2
     Audio..............................       45.2   34.1           43.9     31.9            81.7     33.9          79.7     32.0
     Entertainment......................        6.2    4.7            4.8      3.5            11.2      4.7           8.0      3.2
     Warranty, services
         and other(a)...................        8.3    6.3            8.7      6.3            15.6      6.5          15.8      6.3
                                          ------------------------------------------   ---------------------------------------------
     Net sales..........................     $132.5  100.0%        $137.9    100.0%         $241.2    100.0%       $249.0    100.0%
                                          =========================================    ============================================

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

12.  Supplemental Consolidated Statements of Cash Flows Information

     The following table summarizes supplemental cash flow information.

                                                                                                Six Months Ended
                                                                                                     August 31
     (Amounts in millions)                                                                    2007              2006
     ----------------------------------------------------------------------------------------------------------------
     Supplemental schedule of non-cash investing and financing activities:
       Increase in capital expenditure accrual...........................................    $ 1.7           $24.2
       Capital lease obligation..........................................................    $ 5.2           $   -
       (Decrease) increase in sale-leaseback receivables.................................    $(8.2)          $ 2.4


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  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  August  31,  2007,  the  domestic  segment  operated  652
Superstores and 13 other 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 August 31, 2007, the international segment conducted business through
800 retail  stores and dealer  outlets,  which  consisted  of 508  company-owned
stores,  291 dealer  outlets  and 1 Battery  Plus(R)  store.  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. We are continuing to explore our strategic options, but do not expect
any decisions regarding InterTAN will occur prior to January 2008.

Effective  January 28, 2007,  we returned the  management  of 92 Rogers  Plus(R)
stores to Rogers Wireless Inc. in accordance  with the Amending  Agreement dated
March 27, 2004, between Rogers Wireless Inc. and InterTAN


                                 Page 14 of 32


Canada Ltd. Results from the Rogers Plus(R) stores are presented as results from
discontinued operations in all periods presented.

We closed a domestic  segment  operation in fiscal 2007 that previously had been
held for sale.  Results  from this  operation  are  presented  as  results  from
discontinued operations in all periods presented.

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, the Annual Report on
Form 10-K for the fiscal year ended February 28, 2007, as well as our reports on
Form 8-K and other SEC filings.  All per share  amounts are presented on a fully
diluted basis.

Within the financial tables in this Quarterly Report 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.

EXECUTIVE SUMMARY

Fiscal 2008 Second Quarter Performance

o    Net sales declined 6.2 percent,  driven by a comparable store sales decline
     of 7.9 percent.  In the same period last fiscal year, we posted total sales
     growth of 11.1 percent and comparable store sales growth of 8.5 percent.

o    In the domestic segment,  direct channel sales, which include Web- and call
     center-originated  sales,  grew 20 percent and PC services and home theater
     installation revenues grew 22 percent over the same period last year.

o    Gross profit  margin  declined 313 basis points  compared  with last year's
     result due to a decrease in merchandise margins, which was driven primarily
     by a greater mix of PC hardware  sales as well as a decrease in PC hardware
     and  television  margins,  and a  decrease  in  domestic  segment  extended
     warranty net sales.

o    SG&A expenses as a percentage of net sales increased from the prior year by
     234 basis points, which primarily reflects the deleveraging impact of lower
     sales and  incremental  expenses  associated  with new stores,  information
     technology and services.

o    The loss from continuing  operations before income taxes was 4.8 percent of
     net sales compared with earnings from continuing  operations  before income
     taxes of 0.7 percent of net sales in the same period last year.

o    We reported a net loss from continuing  operations of $63.1 million,  or 38
     cents per diluted share,  for the second  quarter of fiscal 2008,  compared
     with net earnings from continuing  operations of $11.7 million,  or 7 cents
     per diluted share, in the same period last year.


                                 Page 15 of 32


CRITICAL ACCOUNTING POLICIES

See the discussion of critical accounting policies under Management's Discussion
and Analysis of Financial Condition and Results of Operations in our fiscal 2007
Annual  Report on Form  10-K.  These  policies  relate to  inventory  valuation,
goodwill,  accrued lease termination costs, stock-based compensation and pension
plans.  We have updated our critical  accounting  policy for income taxes due to
our adoption of Financial Accounting  Standards Board (FASB)  Interpretation No.
48,  "Accounting  for  Uncertainty in Income Taxes - an  interpretation  of FASB
Statement No. 109" (FIN 48).

Income Taxes

We account for income taxes in accordance with Statement of Financial Accounting
Standard  (SFAS) No. 109,  "Accounting  for Income  Taxes," which  requires that
deferred tax assets and  liabilities  be recognized  using enacted tax rates for
the  effect  of the  temporary  differences  between  the book and tax  basis of
recorded assets and liabilities.  We make estimates and judgments with regard to
the  calculation  of certain tax assets and  liabilities.  SFAS No. 109 requires
that deferred tax assets be reduced by valuation allowances if it is more likely
than not that some  portion  of the  deferred  tax asset  will not be  realized.
Quarterly,  we assess the  likelihood  that the benefits of a deferred tax asset
will be realized by considering  historical and projected taxable income and tax
planning  strategies.  Should a change in circumstances  lead to a change in our
judgment  regarding the  realization of deferred tax assets in future years,  we
adjust the valuation  allowances in the period that the change in  circumstances
occurs,  along  with a current  charge or  credit to net  earnings.  Significant
changes to our estimates and  assumptions  may result in an increase or decrease
to our tax expense in a subsequent period.

On March 1, 2007, we adopted FIN 48. FIN 48  prescribes a recognition  threshold
and  measurement   attribute  for  the  financial   statement   recognition  and
measurement  of a tax  position  taken or  expected to be taken in a tax return.
Positions  taken  by an  entity  in  its  income  tax  returns  must  satisfy  a
more-likely-than-not  recognition threshold, assuming that the positions will be
examined by taxing authorities with full knowledge of all relevant  information,
in order  for the  positions  to be  recognized  in the  consolidated  financial
statements.  Quarterly,  we  evaluate  the  income  tax  positions  taken by the
company,  or expected to be taken by the  company,  to determine  whether  these
positions meet the  more-likely-than-not  threshold prescribed by FIN 48. We are
required to make subjective  judgments and assumptions  regarding our income tax
exposures  and must  consider a variety of  factors,  including  the current tax
statutes,  the current status of audits  performed by tax  authorities,  and the
statute of limitations in each tax jurisdiction.  To the extent an uncertain tax
position is resolved  for an amount  that  varies  from the  recorded  estimated
liability, our income tax expense in a given financial statement period could be
materially affected.

Our  unrecognized  tax benefits were $35.1 million at August 31, 2007, and $15.2
million at February 28,  2007.  In  conjunction  with the adoption of FIN 48, we
have classified unrecognized tax benefits not expected to be settled in one year
as other liabilities on the consolidated  balance sheet.  Additional  discussion
and the impact of adopting  this  Interpretation  are included in Note 4, Income
Taxes, of the Notes to Consolidated  Financial  Statements,  included in Item 1,
Financial Statements, of this Quarterly Report on Form 10-Q.


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 earnings (loss) 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.


                                 Page 16 of 32


FISCAL 2008 SEGMENT PERFORMANCE SUMMARY


                                                             Three Months Ended August 31, 2007
                                                 Domestic                 International                Consolidated
                                                           % of                        % of                       % of
(Dollar amounts in millions)                   $           Sales           $           Sales            $         Sales
-------------------------------------------------------------------------------------------------------------------------
Net sales...............................     $2,511.4     100.0%         $132.5      100.0%         $2,644.0      100.0%
Gross profit............................     $  497.5      19.8%         $ 48.5       36.6%         $  546.0       20.7%
Selling, general and administrative
    expenses............................     $  631.4      25.1%         $ 46.5       35.1%         $  677.9       25.6%
Net (loss) earnings from continuing
    operations..........................     $  (63.2)     (2.5)%        $  0.1        0.1%         $  (63.1)      (2.4)%




                                                              Six Months Ended August 31, 2007
                                                 Domestic                 International                Consolidated
                                                           % of                        % of                       % of
(Dollar amounts in millions)                   $           Sales           $           Sales            $         Sales
-------------------------------------------------------------------------------------------------------------------------
Net sales...............................     $4,888.3     100.0%         $241.2      100.0%         $5,129.5      100.0%
Gross profit............................     $1,017.9      20.8%         $ 88.2       36.6%         $1,106.2       21.6%
Selling, general and administrative
    expenses............................     $1,243.9      25.4%         $ 82.4       34.2%         $1,326.3       25.9%
Net (loss) earnings from continuing
    operations..........................     $(120.6)     (2.5)%         $  2.8        1.1%         $ (117.9)      (2.3)%



FISCAL 2007 SEGMENT PERFORMANCE SUMMARY


                                                             Three Months Ended August 31, 2006
                                                 Domestic                 International                Consolidated
                                                           % of                        % of                       % of
(Dollar amounts in millions)                   $           Sales           $           Sales            $         Sales
-------------------------------------------------------------------------------------------------------------------------
Net sales...............................     $2,680.6     100.0%         $137.9      100.0%         $2,818.5      100.0%
Gross profit............................     $  619.6      23.1%         $ 50.5       36.6%         $  670.1       23.8%
Selling, general and administrative
    expenses............................     $  608.4      22.7%         $ 48.3       35.0%         $  656.7       23.3%
Net earnings from continuing
    operations..........................     $   10.5       0.4%         $  1.2        0.9%         $   11.7        0.4%




                                                              Six Months Ended August 31, 2006
                                                 Domestic                 International                Consolidated
                                                           % of                        % of                       % of
(Dollar amounts in millions)                   $           Sales           $           Sales            $         Sales
-------------------------------------------------------------------------------------------------------------------------
Net sales...............................     $5,166.1     100.0%         $249.0      100.0%         $5,415.1      100.0%
Gross profit............................     $1,214.5      23.5%         $ 91.4       36.7%         $1,305.9       24.1%
Selling, general and administrative
    expenses............................     $1,196.0      23.2%         $ 95.0       38.1%         $1,291.0       23.8%
Net earnings (loss) from continuing
    operations..........................     $  19.8       0.4%          $ (2.8)      (1.1)%        $   17.0        0.3%


                                 Page 17 of 32


Net Sales

Consolidated

For the second  quarter of fiscal 2008,  our net sales  decreased 6.2 percent to
$2.64 billion,  and comparable  store sales  decreased 7.9 percent from the same
period  last  fiscal  year.  Net sales for the first six  months of fiscal  2008
decreased  5.3  percent to $5.13  billion  from $5.42  billion for the first six
months of last fiscal year. Comparable store sales decreased 6.8 percent for the
first six months of fiscal 2008.

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-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, digital cameras, furniture, and related accessories;

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

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

o    entertainment,   which  includes  movie  software,   music  software,  game
     software, game hardware and personal computer 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 second  quarter of fiscal 2008,  the domestic  segment's  net sales were
$2.51 billion,  a decrease of 6.3 percent from the same period last fiscal year.
Comparable  store sales  decreased 8.0 percent driven  primarily by a decline in
conversion rates as a result of the significant  amount of change imposed on the
organization  as  well as a sharp  decline  in  sales  of  tube  and  projection
televisions.  While still negative,  the comparable  store sales change improved
each  successive  period of the quarter  across  most  regions.  We  experienced
particular  regional sales weakness in the Southeast region and California.  For
the quarter,  direct  channel sales,  including Web- and call  center-originated
sales, grew 20 percent, and PC services and home theater  installation  revenues
grew 22 percent over the same period last fiscal year.

For the six months  ended  August 31, 2007,  domestic  segment's  net sales were
$4.89 billion,  a decrease of 5.4 percent over the same period last fiscal year.
Comparable store sales decreased 7.0 percent.

The domestic  segment's net sales  represented  by each major sales category for
the periods ended August 31, 2007 and 2006, are shown below.


                                 Page 18 of 32


NET SALES BY CATEGORY


                                               Three Months Ended August 31                  Six Months Ended August 31
                                              2007                2006(a)                   2007                  2006(a)
                                                   % of                    % of                     % of                  % of
(Dollar amounts in millions)                $      Sales          $        Sales          $         Sales        $         Sales
---------------------------------------------------------------------------------   ---------------------------------------------
Video................................    $  948.2    37.8%     $1,067.5    39.8%       $1,882.2     38.5%      $2,099.3    40.6%
Information technology...............       774.7    30.8         743.0    27.7         1,403.3     28.7        1,361.8    26.4
Audio................................       325.8    13.0         388.7    14.5           660.7     13.5          769.3    14.9
Entertainment........................       267.1    10.6         242.1     9.1           539.7     11.1          500.9     9.7
Warranty, services and other.........       195.6     7.8         239.3     8.9           402.5      8.2          434.8     8.4
                                       ------------------------------------------   ---------------------------------------------
Net sales............................    $2,511.4   100.0%     $2,680.6   100.0%       $4,888.3    100.0%      $5,166.1   100.0%
                                      ==========================================    ============================================

(a)  Reclassifications   have  been  made  to  conform  with  the  current  year
presentation.  These  include  reclassifying  sales from  video and  information
technology to warranty, services and other.

In the video  category,  we  generated  a  double-digit  comparable  store sales
decrease in the second quarter. Comparable store sales of flat panel televisions
increased by double digits. Total television comparable store sales decreased by
double digits, 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  decreased  by a low
single digit.  Comparable store sales of camcorders and DVD hardware declined by
double digits.

In  the  information   technology  category,  we  generated  a  low-single-digit
comparable store sales increase in the second quarter. Comparable store sales of
notebook  computers  increased by double digits,  and comparable  store sales of
desktop computers declined by a low single digit compared with the prior year.

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

In the entertainment category, we generated a high-single-digit comparable store
sales  increase  in  the  second  quarter,   reflecting  a  strong  double-digit
comparable  store sales  increase in video gaming  products  and a  double-digit
comparable store sales increase in PC software.  Comparable store sales of video
software and music software declined by double digits.

Domestic segment extended warranty net sales were $67.0 million,  or 2.7 percent
of  domestic  segment net sales,  in the second  quarter,  compared  with $107.7
million,  or 4.0 percent of domestic  segment net sales, in the same period last
year. This decrease was primarily due to reduced attachment rates resulting from
poor execution as the business was undergoing  significant amounts of change. PC
services and home theater  installation  revenues  increased 22 percent to $63.6
million from $52.1 million in the same period last year.

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

DOMESTIC SEGMENT STORE MIX


                                                         Aug. 31, 2007       Feb. 28, 2007         Aug. 31, 2006
----------------------------------------------------------------------------------------------------------------
Superstores.......................................            652                 642                   632
Other stores......................................             13                  12                     5
                                                      ----------------------------------------------------------
Total domestic segment stores.....................            665                 654                   637
                                                      ==========================================================

During the second quarter of fiscal 2008, we opened nine incremental Superstores
and relocated four Superstores.


                                 Page 19 of 32


International Segment

The  international  segment's net sales  decreased 3.9 percent to $132.5 million
for the second  quarter of fiscal  2008,  compared  with $137.9  million for the
second quarter of last fiscal year. The decrease was driven by the impact of the
year-over-year decrease of 57 retail stores and dealer outlets, net of openings,
as well as the  comparable  store sales decline of 4.4 percent in local currency
for the quarter.  The effect of fluctuations in foreign currency  exchange rates
favorably impacted the sales decline by approximately 5 percentage points.

For the six months ended August 31, 2007, the international  segment's net sales
decreased 3.1 percent to $241.2  million,  compared with $249.0  million for the
six months ended August 31, 2006. The effect of fluctuations in foreign currency
exchange  rates  favorably   impacted  the  sales  decline  by  approximately  3
percentage  points.  Comparable  store  sales  decreased  0.3  percent  in local
currency for the first six months of fiscal 2008.

NET SALES BY CATEGORY

                                                  Three Months Ended August 31                  Six Months Ended August 31
                                                 2007                 2006                     2007                   2006
                                                      % of                    % of                     % of                  % of
(Dollar amounts in millions)                   $      Sales          $        Sales           $        Sales         $        Sales
------------------------------------------------------------------------------------   ---------------------------------------------
Video...................................     $ 26.2   19.7%        $ 27.4     19.9%         $ 46.2     19.2%       $ 47.9     19.2%
Information technology..................       46.6   35.2           53.0     38.4            86.4     35.7          97.6     39.2
Audio...................................       45.2   34.1           43.9     31.9            81.7     33.9          79.7     32.0
Entertainment...........................        6.2    4.7            4.8      3.5            11.2      4.7           8.0      3.2
Warranty, services and other............        8.3    6.3            8.7      6.3            15.6      6.5          15.8      6.3
                                          ------------------------------------------   ---------------------------------------------
Net sales...............................     $132.5  100.0%        $137.9    100.0%         $241.2    100.0%       $249.0    100.0%
                                          =========================================    ============================================

INTERNATIONAL SEGMENT STORE MIX

                                                         Aug. 31, 2007       Feb. 28, 2007         Aug. 31, 2006
----------------------------------------------------------------------------------------------------------------
Company-owned stores..............................            508                 509                   541
Dealer outlets....................................            291                 296                   298
Battery Plus(R) stores..............................            1                   1                    18
                                                        ---------------------------------------------------------
Total international segment stores................            800                 806                   857
                                                      ===========================================================

Effective  January 28, 2007,  we returned the  management  of 92 Rogers  Plus(R)
stores to Rogers Wireless Inc. in accordance  with the Amending  Agreement dated
March 27, 2004,  between  Rogers  Wireless  Inc. and InterTAN  Canada Ltd. As of
August 31, 2006, there were 92 Rogers Plus(R) stores in operation.  Results from
these  stores are  presented  as results  from  discontinued  operations  in all
periods presented.



Gross Profit Margin

Consolidated

The gross profit margin was 20.7 percent of net sales in the second quarter of
fiscal 2008, compared with 23.8 percent for the same period last fiscal year.
For the first six months of fiscal 2008, the gross profit margin was 21.6
percent of net sales, compared with 24.1 percent for the same period last fiscal
year.


                                 Page 20 of 32


Domestic Segment

The domestic  segment's gross profit margin was 19.8 percent of domestic segment
net sales in the second  quarter of fiscal 2008,  compared with 23.1 percent for
the same period last fiscal  year.  The 331 basis point  decrease  impacted  the
consolidated  gross profit margin decline by 317 basis points.  The decrease was
primarily  driven by a decrease of 191 basis points in merchandise  margins as a
percent of domestic segment net sales. The lower merchandise margins were driven
by a greater mix of  lower-margin  PC hardware sales as well as a decrease in PC
hardware and television margins. The margin rate was also negatively impacted by
a decrease of 135 basis  points in extended  warranty  net sales as a percent of
domestic segment net sales.

For the first half of fiscal 2008,  the domestic  segment's  gross profit margin
was 20.8 percent of domestic net sales,  compared with 23.5 percent for the same
period  last fiscal  year.  The margin rate  decline was  primarily  driven by a
decrease  of 154 basis  points in  merchandise  margins as a percent of domestic
segment net sales. The lower merchandise margins were driven by a greater mix of
lower-margin  PC  hardware  sales  as  well as a  decrease  in PC  hardware  and
television  margins.  The margin rate was also negatively impacted by a decrease
of 99 basis  points in  extended  warranty  net sales as a percent  of  domestic
segment net sales.

International Segment

The   international   segment's   gross  profit   margin  was  36.6  percent  of
international  segment net sales in the second quarter of fiscal 2008,  compared
with 36.6  percent for the same  period last fiscal year and did not  materially
impact the consolidated gross profit margin decline.

For the first half of fiscal  2008,  the  international  segment's  gross profit
margin was 36.6  percent of net sales,  compared  with 36.7 percent for the same
period last fiscal year and did not  materially  impact the  consolidated  gross
profit margin decline.


Selling, General and Administrative Expenses

Consolidated

                                                  Three Months Ended August 31                  Six Months Ended August 31
                                                 2007                 2006                     2007                   2006
                                                      % of                    % of                     % of                  % of
(Dollar amounts in millions)                   $      Sales          $        Sales          $         Sales        $         Sales
------------------------------------------------------------------------------------   ---------------------------------------------
Store expenses..........................     $566.1   21.4%        $563.1     20.0%       $1,122.9     21.9%     $1,097.1     20.3%
General and administrative
     expenses...........................       99.3    3.8           83.6      3.0           184.8      3.6         171.0      3.2
Stock-based compensation
     expense............................        5.7    0.2            6.6      0.2            10.2      0.2          15.3      0.3
Remodel expenses........................          -      -            0.5        -               -        -           0.5        -
Relocation expenses.....................        3.4    0.1            0.5        -             4.5      0.1           2.0        -
Pre-opening expenses....................        3.4    0.1            2.4      0.1             3.9      0.1           5.0      0.1
                                          ------------------------------------------   ---------------------------------------------
Total  .................................     $677.9   25.6%        $656.7     23.3%       $1,326.3     25.9%     $1,291.0     23.8%
                                          =========================================    ============================================

Selling,  general and administrative  expenses were 25.6 percent of consolidated
net sales in the second  quarter of fiscal 2008,  compared with 23.3 percent for
the same period last fiscal year.  The domestic  segment  contributed  230 basis
points to the 234 basis point increase in the consolidated selling,  general and
administrative   expense-to-sales   ratio,  while  the  international  segment's
selling,  general and administrative  expense-to-sales  ratio did not materially
impact the consolidated expense-to-sales ratio.

For the first half of fiscal 2008, selling,  general and administrative expenses
as a percentage  of sales  increased  202 basis points from the same period last
fiscal year. The domestic segment contributed 216 basis


                                 Page 21 of 32


points to the 202 basis  point  increase  in the  consolidated  expense-to-sales
ratio,  while the international  segment's decline in expenses  partially offset
this increase.

Domestic Segment

                                                  Three Months Ended August 31                  Six Months Ended August 31
                                                 2007                 2006                     2007                   2006
                                                      % of                    % of                     % of                  % of
(Dollar amounts in millions)                   $      Sales          $        Sales          $         Sales        $         Sales
------------------------------------------------------------------------------------   ---------------------------------------------
Store expenses..........................     $527.4   21.0%        $524.2     19.6%       $1,051.5     21.5%     $1,021.1     19.8%
General and administrative
     expenses...........................       91.7    3.7           74.5      2.8           174.1      3.6         153.3      3.0
Stock-based compensation
     expense............................        5.6    0.2            6.4      0.2             9.9      0.2          14.0      0.3
Remodel expenses........................          -      -            0.5        -               -        -           0.5        -
Relocation expenses.....................        3.4    0.1            0.5        -             4.5      0.1           2.0        -
Pre-opening expenses....................        3.4    0.1            2.4      0.1             3.9      0.1           5.0      0.1
                                          ------------------------------------------   ---------------------------------------------
Total  .................................     $631.4   25.1%        $608.4     22.7%       $1,243.9     25.4%     $1,196.0     23.2%
                                          =========================================    ============================================

For  the  three  months  ended   August  31,   2007,   the  domestic   segment's
expense-to-sales  ratio  increased  245 basis  points  from the same period last
fiscal year. The increase primarily reflects the overall  deleveraging impact of
lower sales; 133 basis points in occupancy costs due primarily to store openings
and increased building maintenance;  and 73 basis points in incremental expenses
in information  technology and services.  The unfavorable impacts were partially
offset by a decrease in compensation  and travel expenses that resulted from our
expense reduction initiatives.

For  the  six  months   ended   August  31,   2007,   the   domestic   segment's
expense-to-sales  ratio  increased  230 basis  points  from the same period last
fiscal year. The increase  primarily  reflects the deleveraging  impact of lower
sales;  106 basis  points  relating to  increased  occupancy  costs due to store
openings; and 81 basis points in incremental expenses for information technology
and services.

International Segment

                                                  Three Months Ended August 31                  Six Months Ended August 31
                                                 2007                 2006                     2007                   2006
                                                      % of                    % of                     % of                  % of
(Dollar amounts in millions)                   $      Sales          $        Sales            $       Sales          $      Sales
------------------------------------------------------------------------------------   ---------------------------------------------
Store expenses..........................      $38.8   29.3%         $38.9     28.2%          $71.4     29.6%        $76.0     30.5%
General and administrative
     expenses...........................        7.5    5.7            9.2      6.7            10.7      4.4          17.7      7.1
Stock-based compensation
     expense............................        0.2    0.1            0.2      0.1             0.3      0.1           1.3      0.5
                                          ------------------------------------------   ---------------------------------------------
Total  .................................      $46.5   35.1%         $48.3     35.0%          $82.4     34.2%        $95.0     38.1%
                                          =========================================    ============================================

For the  three  months  ended  August  31,  2007,  the  international  segment's
expense-to-sales ratio was relatively flat compared to last fiscal year's result
and did not materially impact the consolidated expense-to-sales ratio increase.

For  the  six  months  ended  August  31,  2007  the   international   segment's
expense-to-sales  ratio  decreased  400 basis  points  from the same period last
fiscal year primarily due to $7.5 million of additional  sales proceeds  related
to  a  former  subsidiary,  reducing  fiscal  2008  general  and  administrative
expenses.


                                 Page 22 of 32


Income Tax (Benefit) Expense

The consolidated effective income tax rate applicable to results from continuing
operations  was 44.0 percent for the six months ended August 31, 2007,  and 38.2
percent for the six months ended August 31, 2006.  The increase in the effective
tax rate is the result of an increase in projected tax-exempt  investment income
in proportion to the projected  full-year net loss from  continuing  operations.
The increase was partially offset by the recognition of a valuation allowance of
$0.7 million related to the international  segment.  The valuation allowance was
related to a capital loss carryforward.

Net (Loss) Earnings from Continuing Operations

The net loss  from  continuing  operations  was $63.1  million,  or 38 cents per
diluted  share,  in the three months ended  August 31, 2007,  compared  with net
earnings from  continuing  operations of $11.7  million,  or 7 cents per diluted
share, in the same period last fiscal year.

For  the six  months  ended  August  31,  2007,  the net  loss  from  continuing
operations was $117.9 million, or 71 cents per diluted share,  compared with the
net  earnings  from  continuing  operations  of $17.0  million,  or 10 cents per
diluted share, for the same period last fiscal year.

Earnings (Loss) from Discontinued Operations

For the three months and six months ended  August 31,  2007,  net earnings  from
discontinued  operations totaled $0.2 million and $0.5 million, which are net of
$0.1  million and $0.3  million of income  taxes,  respectively.  These  amounts
primarily  relate to the operations of the Rogers Plus(R)  stores,  of which the
management was returned to Rogers Wireless Inc. in January 2007.

For the quarter ended August 31, 2006, the net loss from discontinued operations
totaled $1.6 million,  which is net of $0.6 million of income taxes, and related
to the operations of the Rogers Plus(R) stores and a domestic segment  operation
that was closed in fiscal  2007.  This $0.6  million of income tax  benefit  was
offset by $0.5  million  of income tax  expense  resulting  from a  revision  of
management's  estimate  regarding certain tax uncertainties  associated with our
discontinued bankcard operation.

For the six  months  ended  August  31,  2006,  the net loss  from  discontinued
operations  totaled $2.3 million,  which is net of $1.0 million of income taxes,
and  related  to the  operations  of the  Rogers  Plus(R)  stores and a domestic
segment  operation  that was closed in fiscal 2007.  This $1.0 million of income
tax benefit was offset by $0.5 million of income tax expense associated with our
discontinued bankcard operation as discussed above.

Cumulative Effect of Change in Accounting Principle

In the  first  quarter  of  fiscal  2007,  we  adopted  Statement  of  Financial
Accounting  Standards No. 123 (revised 2004),  "Share-Based  Payment," using the
modified  prospective  transition  method,  resulting  in a  non-cash  after-tax
benefit of $1.8 million.

RECENT ACCOUNTING PRONOUNCEMENTS

In  June  2006,  the  Financial   Accounting   Standards   Board  (FASB)  issued
Interpretation  No.  48,  "Accounting  for  Uncertainty  in  Income  Taxes  - an
interpretation  of FASB  Statement  No.  109"  (FIN  48).  FIN 48  prescribes  a
recognition  threshold and  measurement  attribute  for the financial  statement
recognition and measurement of a tax position taken or expected to be taken in a
tax  return.  This  Interpretation  also  provides  guidance  on  derecognition,
classification,   interest  and  penalties,   accounting  in  interim   periods,
disclosure  and  transition.  We  adopted  FIN 48 on March 1,  2007.  Additional
discussion and the impact of adopting this  Interpretation  are included in Note
4, Income Taxes, of the Notes to Consolidated Financial Statements,  included in
Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.


                                 Page 23 of 32


In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS
No. 157 defines fair value, establishes a framework for measuring fair value and
requires additional disclosures about fair value measurements. The provisions of
SFAS No. 157 will be effective for us beginning with the first quarter of fiscal
2009. We have not yet determined the impact of adopting this standard.

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.  SFAS No. 159 will be effective  for us beginning  with the first
quarter of fiscal 2009. We have not yet  determined  the impact of adopting this
standard.

FINANCIAL CONDITION

Liquidity and Capital Resources

Cash Flows

Cash Flows Summary
The following  table  summarizes  our cash flows for the six months ended August
31, 2007 and 2006:

                                                                  Six Months Ended
                                                                       August 31
(Amounts in millions)                                           2007             2006
----------------------------------------------------------------------------------------
Net cash (used in) provided by:
  Operating activities....................................    $(133.3)          $(69.3)
  Investing activities....................................      178.4            105.2
  Financing activities....................................      (69.1)           (50.9)
  Discontinued operations.................................       12.2             (4.8)
Effect of exchange rate changes on cash...................        1.5                -
                                                             -------------------------
Decrease in cash and cash equivalents.....................    $ (10.2)          $(19.8)
                                                             =========================

Operating Activities
For the six months ended August 31, 2007, net cash used in operating  activities
was $133.3 million, compared with net cash used in operating activities of $69.3
million in the six months ended August 31, 2006. The change was due primarily to
the net loss  for the six  months  ended  August  31,  2007,  compared  with net
earnings  for the six months  ended  August 31,  2006.  Collections  of accounts
receivable  partially  offset the cash used by operations  during the six months
ended  August 31, 2007.  During the six months  ended August 31, 2007,  accounts
receivable  decreased  $55.8  million as we collected  vendor  receivables  more
quickly.  During  the six months  ended  August 31,  2006,  accounts  receivable
increased $65.9 million.

Investing Activities
Net cash provided by investing  activities was $178.4 million for the six months
ended August 31,  2007,  compared  with $105.2  million for the six months ended
August 31, 2006.  The increase in cash provided by investing  activities was due
primarily to an increase in net sales and  maturities of investment  securities,
partially  offset by increased  purchases  of property and  equipment as we make
investments in new Superstores.

Financing Activities
For the six months ended August 31, 2007, net cash used in financing  activities
was $69.1 million,  compared with net cash used in financing activities of $50.9
million in the six months ended August 31, 2006. The change was due primarily to
decreases  in cash  provided  by the  issuance  of common  stock and  changes in
overdraft  balances.  Decreases  in sources of cash were  partially  offset by a
decrease in cash used to repurchase common stock.

The board of directors has  authorized  the  repurchase of up to $1.2 billion of
common stock,  of which $233.7  million  remained  available at August 31, 2007.
During the three months ended August 31, 2007, we did not


                                 Page 24 of 32


repurchase  common stock  primarily  due to our desire to maintain a strong cash
position as the business was undergoing a significant amount of change and as we
faced an uncertain macroeconomic environment. During the six months ended August
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.  During the same  period  last  fiscal  year,  we used cash to
repurchase  4.3 million shares of common stock at an average price of $27.23 per
share,  for a total price of $117.0 million,  excluding  commission  fees. As of
August 31, 2007, 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  the  inception  of the  stock
repurchase program.

During  fiscal  2007,  the board of  directors  authorized  an  increase  in our
quarterly  dividend rate to $0.04 per share from the previous quarterly dividend
of $0.0175 per share on our common stock. The dividend rate change was effective
with the  declaration  of the quarterly  dividend in the third quarter of fiscal
2007,  resulting in an increase in cash used to pay  dividends in the six months
ended August 31, 2007, compared with the six months ended August 31, 2006.

Cash, Cash Equivalents and Short-term Investments
At August 31, 2007, we had cash, cash equivalents and short-term  investments of
$424.4  million,  compared with $739.5  million at February 28, 2007. The $315.1
million  decline in the cash position  primarily  reflects cash used to purchase
property and  equipment of $148.2  million and cash used by operations of $133.3
million. Stock repurchases and dividend payments of $60.2 million also drove the
decrease in the cash position.

Net-owned Inventory
Merchandise  inventory increased to $1.83 billion at August 31, 2007, from $1.64
billion at February 28, 2007.  Net-owned  inventory,  calculated as  merchandise
inventory less merchandise payable,  increased by $8.7 million from February 28,
2007, to August 31, 2007.  International  segment net-owned  inventory increased
$19.6 million primarily due to a decrease in merchandise payables related to the
timing  of  payments.  International  segment  merchandise  inventory  increased
primarily due to the impact of fluctuations in foreign currency  exchange rates.
Domestic segment  net-owned  inventory  decreased by $10.9 million from February
28, 2007,  to August 31, 2007.  An increase in  merchandise  payables  primarily
related to the timing of  payments  was  largely  offset by  seasonal  inventory
build.

Capital Expenditures
Capital expenditures, net of landlord reimbursements, were $133.2 million in the
six months  ended  August 31,  2007,  compared  with $127.0  million in the same
period  last  fiscal  year.  The  increase  in capital  expenditures  was driven
primarily by increased investments in new and relocated Superstores.

Sources of Liquidity
We have a $500  million  revolving  credit  facility  secured by  inventory  and
accounts  receivable.  This  facility is scheduled  to mature in June 2009.  The
credit  facility  provides for a $400 million  borrowing  limit for the domestic
segment and a $100 million  borrowing limit for the  international  segment.  At
August  31,  2007,  we  had  no  short-term  borrowings.  At  August  31,  2007,
outstanding  letters  of credit  were  $58.1  million,  leaving  $441.9  million
available for borrowing.  We were in compliance with all covenants at August 31,
2007.

Our primary sources of liquidity include available cash, the expected  reduction
in  net-owned  inventory,  borrowing  capacity  under the  credit  facility  and
landlord reimbursements. We expect that our primary sources of liquidity will be
sufficient to fund capital  expenditures and working capital for the foreseeable
future.

Contractual Obligations and Contingencies
In March 2007,  we signed a  seven-year,  $775  million  information  technology
services  contract with IBM. Also, as a result of the adoption of FIN 48, we had
$34.9  million of  unrecognized  tax benefits and the related  accrued  interest
recorded in other  liabilities on the  consolidated  balance sheet at August 31,
2007.  We are not able to  reasonably  estimate in which  future  periods  these
unrecognized tax benefits will be settled.


                                 Page 25 of 32


FINANCIAL OUTLOOK

We expect continued weakness in our third quarter results,  with a net loss from
continuing  operations only slightly less than that of the second  quarter.  The
marginal  improvement  will result from  stabilizing  performance  levels in the
domestic  segment by the end of the quarter as the pace of change  slows in both
the stores and the store support  center.  We expect  continued  disruption  for
approximately  45 to 60 days as the  stores  fully  adjust  to the new  in-store
customer  experience model,  which rolled out nationwide during the last week of
September.  While the domestic segment's performance is expected to stabilize by
the  holiday  selling  season,  the  results  could be  negatively  impacted  by
unfavorable  macroeconomic  trends.  We expect to  deliver a net  profit for the
fourth quarter and a full-year net loss from continuing operations.

We have  rolled  out our  domestic  segment's  new  point-of-sale  system to 134
stores. We have paused our scale efforts,  limiting new system implementation to
new stores  only.  We expect to resume  the full  deployment  after the  holiday
selling  season.  This pause will  enable our  Associates  to focus on  in-store
execution.

We  continue  to  expect to open 60 to 65  incremental  and  relocated  domestic
segment  Superstores  in  fiscal  2008.  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.  The  company  expects
approximately two-thirds of the openings to be in a 20,000 square foot format.

Domestic Segment Superstore Openings Estimates

                                              Q1(a)  Q2(a)    Q3        Q4       FY08
-------------------------------------------------------------------------------------
Incremental Superstores....................     0      9     18-19     16-18     43-46
Relocated Superstores......................     1      4      7-8       5-6      17-19
                                             -----------------------------------------
Total Superstore openings..................     1     13     25-27     21-24     60-65
                                           ===========================================

(a) First and second  quarter  openings are actual.  On February  26, 2007,  the
company closed one store in advance of opening a replacement  store in the first
quarter of fiscal 2008. The replacement store is included in relocations for the
first quarter of fiscal 2008.


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 2008 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;


                                 Page 26 of 32


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 growing 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 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    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 initiatives  related to upgrading  merchandising,  marketing,
     point-of-sale  and information  systems on revenue and operating margin and
     the costs associated with these investments;
o    the potential financial, accounting and operational impact of delays in the
     implementation  and completion  schedules of the  point-of-sale and various
     merchandising and marketing systems;
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    our strategic evaluation of the international segment, including the impact
     of changes in credit markets
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    changes in our anticipated cash flow;
o    whether,  when and in what amounts share  repurchases may be made under our
     stock buyback program;
o    adverse results in significant litigation matters;
o    currency exchange rate  fluctuations  between Canadian and U.S. dollars and
     other currencies;


                                 Page 27 of 32


o    the global regulatory and trade environment;
o    the disruption of global, national or regional transportation systems; and
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.

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 August 31,
2007, U.S. dollar open purchase orders totaled approximately $45.9 million. A 10
percent  decline in the value of the Canadian dollar would result in an increase
in product cost of approximately  $4.6 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 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.

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,   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  concluded that the company's
disclosure controls and procedures are effective.

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 August 31, 2007,  that have  materially
affected,  or are reasonably likely to materially affect, the company's internal
control over financial reporting.


                                 Page 28 of 32


                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

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 28, 2007, 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 2007
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 August 31, 2007:

                                                                                                               Approximate
                                                                                         Total Number        Dollar Value of
                                                                                          of Shares            Shares that
                                                                         Average        Purchased as           May Yet Be
                                                  Total Number            Price        Part of Publicly         Purchased
(Amounts in millions except per                    of Shares              Paid             Announced              Under
share data and footnote (a) data)                 Purchased(a)         per Share(a)          Program          the Program(b)
------------------------------------------------------------------------------------------------------------------------------
June 1 - June 30, 2007.......................             -              $    -                  -                  $233.7
July 1 - July 31, 2007.......................           0.1              $15.08                  -                  $233.7
August 1 - August 31, 2007...................             -              $10.87                  -                  $233.7
                                                -----------------                      -----------------
Total fiscal 2008 second quarter.............           0.1              $14.70                  -
                                                =================                      =================

(a) These columns include shares of common stock withheld to pay tax withholding
obligations  for employees in connection  with the vesting of stock awards.  The
withholding  of 68,231 shares in the month of July and 6,728 shares in the month
of August are not considered part of the share repurchase  program  described in
(b) below.

(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 August 31, 2007,  $233.7  million
remained available for stock repurchases under the $1.2 billion stock repurchase
authorization.


                                 Page 29 of 32


ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)  The annual meeting of the company's shareholders was held June 26, 2007.


(b)  At the annual meeting,  the  shareholders of the company elected Barbara S.
     Feigin, Allen B. King and Carolyn Y. Woo as directors for a three-year term
     and James F. Hardymon as director for a two-year  term.  The elections were
     approved by the following votes:

               Directors                  For                  Withheld
       -------------------------    ----------------         -------------
       Barbara S. Feigin              129,384,915             11,861,046
       Allen B. King                  137,758,359              3,487,602
       Carolyn Y. Woo                 137,797,810              3,448,151
       James F. Hardymon              131,009,244             10,236,717


(c)  At the annual meeting,  the shareholders of the company voted to ratify the
     appointment  of KPMG LLP as the company's  independent  auditors for fiscal
     year 2008. This ratification was approved by the following votes:

                                                                 Broker
        For               Against             Abstain           Non-Vote
   --------------      --------------      ------------         --------
    138,868,286          1,589,308            788,367              0


ITEM 6.       EXHIBITS


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)



                By:   /s/ Philip J. Schoonover
                      --------------------------------------
                      Philip J. Schoonover
                      Chairman, President and
                      Chief Executive Officer
                      (Principal Executive Officer)



                By:   /s/ Bruce H. Besanko
                      --------------------------------------
                      Bruce H. Besanko
                      Executive Vice President and
                      Chief Financial Officer
                      (Principal Financial Officer)


                By:   /s/ Philip J. Dunn
                      --------------------------------------
                      Philip J. Dunn
                      Senior Vice President, Treasurer,
                      Controller and Chief Accounting Officer
                      (Principal Accounting Officer)




October 9, 2007


                                 Page 31 of 32


                                 EXHIBIT INDEX

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