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This one is going to hurt

Circuit City, the nation's second largest electronics retailer, has been struggling badly in its attempt to compete with industry leader Best Buy.  It replaced its chief executive last month and withdrew its financial outlook for the entire year citing traffic declines, stronger competition and a weak brand, along with a particularly large second quarter loss.  Since Q2 2007, Circuit City has only been profitable for one quarter.

Now a Wall Street Journal report, citing sources close to the company, says that drastic measures may be taken to put the electronics retailer back on course.  Circuit City is reportedly considering closing 150 stores and cutting thousands of employees.  The move would allow Circuit City to liquidate $350M USD in assets and possibly avoid Chapter 11 bankruptcy.

The cuts could help Circuit City pay off its leases on its various properties, including its abandoned sites and then renegotiate leases on the remaining stores.

However, the company may consider Chapter 11 bankruptcy protection as an alternative to or in addition to the possible closures.  The company has reportedly hired Skadden, Arps, Slate, Meagher & Flom LLP as its bankruptcy counsel, the firm that handled Kmart's Chapter 11 filing.  It has also hired FTI Consulting Inc. to generate an emergency turnaround plan, and Rothschild Inc. to seek out emergency financing in the banking market.

Early this year, Blockbuster Inc. made a $1.35B USD bid for Circuit City.  This bid was later withdrawn, with Blockbuster citing market changes.  With the recent troubles another merger may not be out of the question, though.

Shares of Circuit City stock have dropped 90.7 percent since the year's start due to the plethora of bad news.

Circuit City's current predicament may remind many of CompUSA’s decline.  At its peak, CompUSA had hundreds of locations.  Faced with falling sales, the company was sold and closed virtually all of its locations.  The company brand and its 16 remaining stores were bought by Systemax, owner of the e-tailer TigerDirect.  The CompUSA brand currently has 23 open stores.

If Circuit City were to exit the market, Best Buy would have a virtual monopoly over large, nationwide brick-and-mortar electronics stores.  It would still face competition, though from smaller stores like Fry's, RadioShack, and the remnants of CompUSA and Circuit City.  It would also continue to face growing pressure from online retailers like Newegg who have shown steady growth.


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Mixed bag.
By Motoman on 10/20/2008 3:13:01 PM , Rating: 5
The good:
1. Circuit City stinks in so many ways...let them die such that we need not suffer their existence any further.

The bad:
1. Peeps lose jobs. Even if they are largely clueless themselves.
2. Best Buy gets even more marketshare. And they suck at least as much as Circuit City.

The ugly:
1. Why won't less-sucky places like Micro Center and Fry's put up more stores in major metros so that people who know how much BBY and CC suck can buy the things they need at more reasonable prices with less suckage?
2. Because they're too poor already to deal with BBY's inflated prices to begin with, consumer peeps will probably head to Wal-Mart more often. Adding fuel to their ignoble fire. Furthered by the lack of reasonable alternatives such as in #1.




RE: Mixed bag.
By johnbuk on 10/20/2008 3:30:22 PM , Rating: 2
Sucks only because they are one of the few such stores (along with Best Buy) that we have where I live.

That said, I can count on one hand the number of things I've purchased from them in the last 5 years- one high end HDTV (because it was a good deal and unlike their current round of BS commercials, they would not give me the online price in their store) and a few video games.

Much cheaper usually to buy online from other sources- can find better deals and I don't have to deal with idiot salespeople who try and convince me that I need overpriced service plans and that $100 HDMI cables are better than reasonably priced ones.


RE: Mixed bag.
By 67STANG on 10/20/2008 4:31:08 PM , Rating: 4
This news is quite good. Now I know where to get a Blue Ray player on closeout. No, I don't need the extended service plan... thanks.


RE: Mixed bag.
By michael2k on 10/20/2008 5:43:52 PM , Rating: 2
You do know that many times they actually raise prices right before liquidation? Therefore your "30% off" is really only 5% discount...


RE: Mixed bag.
By Oregonian2 on 10/20/2008 5:52:37 PM , Rating: 2
Prices here on the very last day of the local CompUSA store's liquidation were still higher than one could buy the stuff most elsewhere. Duh.


RE: Mixed bag.
By HOOfan 1 on 10/20/2008 6:05:50 PM , Rating: 2
At my CompUSA for the first few weeks of liquidation they jacked the original price up over MSRP, then took of tiny percentages off...especially big sellers like hard drives. Later on they dropped the prices down to around MSRP and gave fairly decent percentages off of the type of stuff I was looking for, mainly Power Supplies. I got an HX620 for $100 straight up. Even with rebates they are more expensive than that at the moment. If I had waited another week or so I would have probably gotten it for $80 (except mine was the last on the shelf). However the fast moving stuff was already gone, probably sold off wholesale.


RE: Mixed bag.
By strikeback03 on 10/21/2008 8:49:10 AM , Rating: 2
I got the same PSU for the same price. Was the only component they had which was cheaper than Newegg.


RE: Mixed bag.
By 67STANG on 10/20/2008 6:45:58 PM , Rating: 2
Good. I'll wait for the 70% off sale.


RE: Mixed bag.
By Oregonian2 on 10/20/2008 5:51:12 PM , Rating: 2
I'm not sure if I'm different, but I find it no trouble whatsoever in just saying no to the extended warranty or high-priced cables. I nearly never get resistance to a "no thanks" -- and the few times where they may try the extended warranty again, I just use the "If what you're selling me is so unreliable that it needs an extended warranty, maybe I shouldn't buy it from you to begin with. Is it going to break down right after the manufacture's warranty expires?" -- and that ends it.


RE: Mixed bag.
By JazzMang on 10/21/2008 1:49:06 AM , Rating: 2
quote:
"If what you're selling me is so unreliable that it needs an extended warranty, maybe I shouldn't buy it from you to begin with. Is it going to break down right after the manufacture's warranty expires?"

Because if you buy that product somewhere else its going to be more reliable? Sorry, logic fail.


RE: Mixed bag.
By mcnabney on 10/21/2008 10:57:05 AM , Rating: 2
Those Circuit City extended warranties are often only good if you return the product to a Circuit City. If CC closes, your warranty goes with it.


RE: Mixed bag.
By aj28 on 10/21/2008 8:17:35 PM , Rating: 2
Actually CC warranties are managed by GE Assurant soooo the only thing you'd lose is carry-in service.


RE: Mixed bag.
By Oregonian2 on 10/21/2008 1:05:32 PM , Rating: 2
Um... your logic fails as well in missing the point. Actually missing two points. Maybe three. First point is that the phrase I use doesn't "threaten" that I'll buy the same thing from someone else. I threaten not buying it at all. Secondly, that doesn't matter to the sales droid because I'd not be buying from HIM, so he doesn't get his commission -- and THAT is why the statement was being made. Third point is that it works, which is the ultimate point I was making. I've actually done that a few times, and it actually worked instantly each time. If you don't want or need my method of handling the situation, that's fine, ignore it -- for those who do: "it works".


RE: Mixed bag.
By tehbiz on 10/21/08, Rating: 0
RE: Mixed bag.
By Oregonian2 on 10/21/2008 7:29:18 PM , Rating: 2
If you look at my "original" comment, I said that the vast majority of the time my just saying "no" once was adequate. This includes purchases at both BB and CC, I didn't mean a specific store. The times where the salesman pushed beyond my "no" was at CompUSA (they did occasionally have some product that others didn't have in stock, so I had to buy there despite the prices). Didn't mention this because it wasn't relevant to what I was saying because I was talking both generically about the salesman situation (they have to act first) and talking about my real life experiences (that I didn't think arguable).

I did get pushed a little on the $150 HDMI cables at a BB subsidiary when I bought a $4400 plasma TV last year -- my reliability ploy doesn't work in that case. Just had to repeat "no" several times.

P.S. - You would NOT logically get me to say that in general the extended service plan was a good idea, because it's not (and Consumer Reports is someone you'd have to convince as well because they say "not" as well). There can be special cases where they are, but not generally.


RE: Mixed bag.
By techpro on 10/22/08, Rating: 0
RE: Mixed bag.
By Oregonian2 on 10/22/2008 2:47:43 PM , Rating: 2
I could write at length, but you don't know what you're talking about, and I'll leave it at that. But I'll leave with one point. If the probability of something failing is 1~2% (based on survey based statistics) and a service contract costs 15% of the product's cost, then it's a bad bet buying that contract. These are the actual stats of something I recently bought, btw, including the service contract price (3-year extension)). It's this statistical analysis that CR's opinion is based. As to cables, I'll just say that I'm an EE of thirty years design experience (who just went to a National Semi dog and pony show about their LVDS signal conditioning components that open up the eye patterns) and my confidence in evaluating cables is enough not to worry about your comments. Sorry about you getting axed at CC, their doing that is a huge blotch on the company in my eyes because I liked the folk there more than other places before their purge of experienced folk.


RE: Mixed bag.
By quiksilvr on 10/20/2008 3:38:03 PM , Rating: 3
It's just the first step to purely digital purchases. In time consumers will grow a brain and realize that buying things alone is much cheaper:

http://www.bestbuy.com/site/olspage.jsp?skuId=8744...

http://www.amazon.com/gp/offer-listing/B0014CXA2I/...

God I hate Best Buy...


RE: Mixed bag.
By quiksilvr on 10/20/2008 3:39:48 PM , Rating: 2
Oh and one more thing. This is addressed to Jason: It's not a monopoly if Wal Mart exists...


RE: Mixed bag.
By Motoman on 10/20/2008 3:51:26 PM , Rating: 3
quote:
In time consumers will grow a brain


Oh my...laughed so hard I nearly choked.

The VAST majority of consumers are blithering idiots, afraid of and/or incapable of buying anything online, and who mindlessly do whatever the magic picture box in the living room tells them to do. Which is to go to BBY.

That will not be changing any time soon.


RE: Mixed bag.
By nineball9 on 10/20/2008 5:25:58 PM , Rating: 2
Some, perhaps many, do not use the internet for purchases. However, the internet is not always the best choice.

While I make many of my purchases online, there are some items which I need to see/hear/try before purchasing. For instance, I always listen to (quality) speakers in-store instead of buying them blind via the internet.


RE: Mixed bag.
By mindless1 on 10/20/2008 5:41:25 PM , Rating: 2
Agreed, sometimes paying that few % more to see it, try it, have it quickly or return it without unnecessary shipping costs for larger items is worth it. While I prefer online shopping for most items, CC stores closing is bad news even for those who never shop there.


RE: Mixed bag.
By chick0n on 10/20/08, Rating: -1
RE: Mixed bag.
By mindless1 on 10/23/2008 1:43:31 AM , Rating: 1
Who wrote Bose? Frankly, you're thinking in terms of an idiot. I have a good sounding stereo system in more besides my HT system. What about bedroom, bathroom, kitchen, garage, basement, etc?

Thinking high end for all these when most will only need reasonably sound instead of high-end, it silly. Every purpose has the right end.


RE: Mixed bag.
By AFMatt on 10/21/2008 2:48:25 AM , Rating: 2
I like to see/hear/try as well, but I go to BB or the nearest like store and see the items, then go find them online for cheaper.


RE: Mixed bag.
By Samus on 10/20/2008 4:47:35 PM , Rating: 3
You do understand Fry's and Microcenter have the industry-worst customer satisfaction and the worst employee benifits. That's why they're so much cheaper.

Read consumer reports or just talk to employee's at these places. But hey, at least you didn't mention CompUSA (not that it matters anymore, lol) or TigerDirect (who probably has the worst reputation of customer service in existance.)


RE: Mixed bag.
By Motoman on 10/20/2008 4:58:24 PM , Rating: 2
Hmmm...well, I've returned things to Fry's before without hassle...and at Micro Center too. That's the extent of what I can say about their customer service. Can't comment on how they treat their employees, as I have not been one and don't know any...although I reckon it's probably not unreasonable to expect them to be more-or-less like the rest of the retail industry (likely somewhat sucky). The staff at Micro Center do seem generally knowledgable too, as opposed to the know-nothings typically working at BBY etc.

From a pure consumer point of view though, their prices are darn close to on-line a lot of the time (especially Micro Center), and they tend to have a good selection to choose from. So from my standpoint as a consumer, either are vastly preferable to BBY or any other B&M place.

Ironically, I noticed a lot of CompUSA branded stuff on sale at the Micro Center (not really) near mer a while ago.


RE: Mixed bag.
By exanimas on 10/22/2008 12:07:05 AM , Rating: 2
Anytime you go to a retail store, you're going to find that a majority of the employees don't have a clue what they're talking about. The reason is really simple: They don't pay enough to get knowledgeable and committed people. You aren't going to find a bunch of people who know everything about computers that are willing to work for $10.50 an hour.

At the Best Buy I work at, I've actually heard employees say (in regard to a sale/product info etc), "They don't pay me enough to care." In a way, it's true. The amount of work I do as a tech there isn't worth what they pay me IMO. I could find an entry-level IT support job somewhere else and make about $10K more a year and do a lot less work, as well as take a lot less abuse from people upset at me for things that are out of my control (prices, policies, etc). If things go right, that's exactly what I'm going to do.


RE: Mixed bag.
By feraltoad on 10/21/2008 3:14:51 AM , Rating: 2
I've never had a problem with TigerDirect. They screw u over?


RE: Mixed bag.
By jojo29 on 10/21/2008 1:52:30 PM , Rating: 2
I do not agree with your comment. If by Customer Satisfaction you are referring to returned goods and refunds then Besty Buy is adequate.

See, in my experience, Fry's has had the BEST Customer Service and Employees. They are knowledgeable and try to help you right away. I've been to 2 Frys' the one in San Diego and the one in Burbank, California of course.

Now, i've been to FOUR Best Buy's )(Palmdale, Porter Ranch, Palm Springs, Riverside) AND EVERY SINGLE ONE OF THEM had HORRIBLE Customer Service, anytime i would find a rep, and ask them a question, they said, sorry not my department, or let me find someone to help you, only to have to wait over 30minutes only to have me leave.

Circuit City's Customer service is much better than best buys. I have bought all 4 of my Sony HDTVs from them, simply because as i was browsing, i had a rep ask me if needed any help, which to me surprised me because at BB, this NEVER happens, i usually have to either LOOK for someone to ask, or just walk out and buy online.


RE: Mixed bag.
By Spuke on 10/20/2008 5:44:25 PM , Rating: 2
quote:
The good: 1. Circuit City stinks in so many ways...let them die such that we need not suffer their existence any further.
LMAO!!! Now THIS belongs at the bottom of the page.


RE: Mixed bag.
By Hiawa23 on 10/21/2008 8:55:07 AM , Rating: 2
I have shopped at both CC & BB for 15 or so years, & BB has always appealed more to me, everything from it's brightly lit stores, the layout, I have always been a Bestbuy fan & mostly all my elctronics, music, DVDs, videogames are bought from them. Rewardzone has been rewarding, & many have seen the decline of Circuit City coming for years now. I hope they don't fold cause my first option is usually Best Buy, then Circuit City 2nd, but generally most of the BBs I go to, the stores are clean, everything is organized, videogames up to date, then you go to CC & it's the total opposite.


RE: Mixed bag.
By ShaolinSoccer on 10/22/2008 12:35:29 AM , Rating: 2
Circuit City just has bad management. They pretty much let their employees be lazy and that just looks bad. One thing though, they have good clearance sales. I have bought many things from CC these past few months. Bought Crysis for $20. A 4GB pro 2 duo memory card for $25 that works fine in the Sony PSP I bought from CC. Bought my first intel PC back in 1999 from CC for a very good price. Lots of other stuff. Right now they got a PC games clearance going on. You can buy City of Heroes for $4.99. Some games are less than a dollar. If they close the store here where I live, that will be bad news for me. I been shopping there since I was 15 and I'm now 36. So this really is bad news to me...


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