GLEN ALLEN, Va. — The Sony Grand Wega — a monster-sized, high-definition TV — almost didn't fit into the large SUV idling in front of a Circuit City store.

Nevertheless, the sight of the $2,700-plus television leaving the store cheered company President Philip J. Schoonover. The company's CEO-elect is counting on booming home-entertainment sales — and namely, those big-ticket flat-panel TVs — to help boost Circuit City Stores Inc.'s revenue.

"I think we plan to be No. 1 in the most important businesses," Schoonover said at the suburban Richmond store. "We're making some very big decisions on what we're not going to be."

Once the nation's No. 1 chain of consumer electronics stores, Circuit City lost its crown in the '90s to Best Buy Co. Inc., which had built bigger stores in good locations, achieving economies of scale and sharply focusing on its business. Meanwhile, Circuit City was stuck with older stores and poorer-performing locations.

But Circuit City surprised Wall Street by posting better-than-expected earnings in the second quarter, and then in the third quarter ended Nov. 30. The improvements followed years of relocating poor-performing stores, overhauling merchandising and sharpening its focus.

Sales at stores open at least a year rose 13.1 percent in the third quarter ended Nov. 30, compared with Best Buy's 3.3 percent gain for the similar period. In Circuit City's TV category, same-store sales rose in the double digits, with flat-panels experiencing triple-digit gains. In the past year, Circuit City has doubled the number of different flat-panel TVs it offers in the average store to about 80.

Meanwhile, Best Buy, based in Minneapolis, has struggled with higher costs associated with its effort to focus on its most profitable customers. Bank of America analyst David Strasser says Best Buy also got a "choppy" start to the quarter because of Circuit City's and Wal-Mart's early, aggressive promotions.

Still, he said, Circuit City won't be able to keep up with the big guys for long.

"While (Best Buy) may look like the relative underperformer this quarter, we believe their strategies will prove more fruitful long term, especially as (Wal-Mart) gets aggressive," Strasser said.

But Gary Balter, an analyst with Credit Suisse First Boston, said Circuit City is using its smaller stores to its advantage "by focusing on the better growth businesses," including the latest TVs. "Circuit City is fighting the battle on their terms," he said in a recent report.

Analysts give some of the credit to Schoonover, a former Best Buy executive hired as Circuit City's chief merchandising officer last fall. He quickly scaled the ranks, becoming president in February, and is to become CEO on March 1.

With Schoonover taking charge, Circuit City started the holiday season more competitively.

Last year, parking lots of some Circuit City stores were barely half full while nearby Best Buys packed their aisles with shoppers. Executives at Circuit City's Richmond headquarters clearly learned their lesson. This year, they took a more aggressive pricing stance, offering laptop computers for $199.99 apiece and desktop computers at no cost after rebates and other savings.

Schoonover hopes to steer more buyers to Circuit City's expanded television aisles, where he says the opportunities will be staggering.

As prices of advanced TVs continue to fall, many Americans are expected to upgrade their old sets. Over the next eight years, they could purchase as many as 250 million new TV sets, the company estimates. And they'll be buying installation services, accessories and furniture — areas where Circuit City is also trying to carve niches.