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Print 73 comment(s) - last by mindless1.. on Oct 23 at 1:43 AM

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  This bid was later withdrawn, with Blockbuster citing market changes.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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Every smart consumer goes online to buy
By gigahertz20 on 10/20/2008 3:30:02 PM , Rating: 5
Places like Circuit City and Best Buy can not compete with online retailers like Newegg. The only people I know of that go to retail stores to buy expensive items are people that are clueless of how to find things online, or are otherwise paranoid of purchasing something using their credit card online.

All you have to do is look at the mark-up places like Best Buy put on their products, and compare those prices to a place like Newegg.

You can't forget the sales tax you get stuck with as well when you purchase from a brick and mortar location.




RE: Every smart consumer goes online to buy
By Bateluer on 10/20/2008 3:48:15 PM , Rating: 3
I tend to buy large items from B&M stores because the shipping costs can be outrageous. And sometimes you want to inspect and compare multiple items side by side. You can't compare the displays of LCD TVs at Newegg with actual TV programs.

Some times you can get better deals at Costco, Sams, Amazon, Newegg, or even BB. Any informed consumer will be shopping around.


RE: Every smart consumer goes online to buy
By FITCamaro on 10/20/2008 4:09:41 PM , Rating: 2
Yeah I don't want to have to ship my TV back if it gets damaged in transit. Or if something goes wrong.


RE: Every smart consumer goes online to buy
By chmilz on 10/20/2008 6:54:03 PM , Rating: 1
I buy things like TV's, stereo, etc in B&M stores purely for the ease of return. I can take it home and use it for 20+ days and if it doesn't perform like I expect it to, I just take it back. A ridiculous pain in the butt to do the same online.

Oh, and I'm in Canada, so shipping is usually significantly more than in the US, often negating any savings.


By BillyAZ1983 on 10/21/2008 4:08:20 PM , Rating: 2
quote:
Yeah I don't want to have to ship my TV back if it gets damaged in transit. Or if something goes wrong.


quote:
I buy things like TV's, stereo, etc in B&M stores purely for the ease of return. I can take it home and use it for 20+ days and if it doesn't perform like I expect it to, I just take it back. A ridiculous pain in the butt to do the same online.


Exactly! The last time I bought set of speakers on-line that I thought I would be saving money on by buying from an onlin e-tailer instead of a B&M, I had not one but two sets of defective speakers and got charge shipping twice in order to RMA it. Plus, I had some computer parts where they tell me I have to deal with manufacturer and I had to pay them just to create an RMA. How stupid and inconvienent is that?

Besides, depnding on how nice you are, you can usually butter up salesmen and they can cut you a better deal on whatever it is you're buying. An online store won't do that.

The cost of shipping an item the size of a TV is just rediculous. In some cases, I've seen it where sales tax was cheaper then the actual shipment would have been.


RE: Every smart consumer goes online to buy
By awer26 on 10/20/2008 4:56:49 PM , Rating: 3
quote:
You can't compare the displays of LCD TVs at Newegg with actual TV programs.


No, but you can compare them at a B&M store then buy that model online ;)


By mindless1 on 10/20/2008 5:46:30 PM , Rating: 2
... in which case the B&M makes no money, shuts down, and you don't have that luxury anymore. Someone offering you a service deserves a little money thrown their way every now and then, at least enough to stay in business if you value being about to see products in person and sometimes that is very helpful.


By michael2k on 10/20/2008 5:46:34 PM , Rating: 2
Not if they all close...

Good Guys bought out by CompUSA...
CompUSA closes...
Circuit City closing...

What will you have left? Target, WalMart, Best Buy, and Costco?


RE: Every smart consumer goes online to buy
By KoreyJ on 10/21/2008 4:53:53 AM , Rating: 2
For example, my situation...The Samung 32" LN32A450C1D LCD TV I recently purchased.

at Best Buy B&M: $699 (at its cheapest) = sales tax

versus

NewEgg: $624.99, no sales tax, free shipping .

The obvious winner: NewEgg.

The TV looks great as the one I saw in Best Buy and it got here in 2 days. :)


RE: Every smart consumer goes online to buy
By theapparition on 10/21/2008 8:15:56 AM , Rating: 2
quote:
NewEgg: $624.99, no sales tax, free shipping .

Err.......you mean deferred sales tax, right? Since you are legally obligated to report out-of-state purchases on your state income tax report.

I'll take it that you just forgot that, not that you were actually intending to defraud your state government. Never know who reads these boards.


By strikeback03 on 10/21/2008 8:52:04 AM , Rating: 2
In NY at least, you don't (at the moment) have to pay actual tax rate on purchases under $1000 from the internet, there is just a flat fee of $15 to cover those you can choose to pay.


RE: Every smart consumer goes online to buy
By Oregonian2 on 10/20/2008 5:33:04 PM , Rating: 2
They couldn't compete with the old newegg, but I've found myself occasionally buying things from circuit city's online store and then stopping by to pick it up on the way home (slight detour) -- and have it cheaper than NewEgg with shipping included. Now, mind you, their inventories are very different, and I'm only talking about a small portion of that which overlaps, but I've found Circuit City good competition for NewEgg sometimes of late. Just saw an ad where CC says their online prices are now the same as in the store. I presume they've raised their online prices. Oh well.

Now.. in the olden days, NewEgg would have blown them to smithereens, but NewEgg prices aren't so low as they used to be, and shipping has been going up (even though most NewEgg stuff comes from only one state away).

We've also Fry's here as well, but it's about 20 miles away and while they have tremendous selection (their strength), their "normal" prices aren't any better than Circuit City or Best Buy that I've seen except when they've stuff on sale (where their price is fantastic for those few people who got one before they ran out -- usually not me).

Used to have a CompUSA nearby (and a "Good Guys" which was near there before CompUSA bought them out). Horrible horrible prices and even worse customer service (picture lines of people at a *single* open checkout stand, and the one cashier offering to take the tiny package of goods out to the customer's car for her (admittedly she was, well, .. you get the picture).


By theapparition on 10/21/2008 8:22:48 AM , Rating: 2
I agree. I really did like CC's buy online, pick up at the store. I usually found prices competitive, and for some things, it was actually cheaper.

One time, I had a drive in a raid 1 array go down, and it was replaced in 40 min, vs having to cross my fingers for a few days with Newegg. Sure, I paid a whooping $5 more for that convience, but it was worth it.

I have a BB and CC about 10 minutes from my house. Imagine my surprise, with all of Circuit City's troubles, when I just saw a new CC store opening up right around the corner, literally 1 minute away. How many stores do they need in an area?


By Ilostmymojo on 10/21/2008 2:01:01 AM , Rating: 2
I bought my Samsung 26" monitor from BB for 250 bucks. It was a display Model but they had new one for 281. Never seen newegg come close to that! Would be a lot easier to return too. Especially with Newegg's dead pixel policy. Bought my E8500 from Fry's for 149.00. Other than that i usually buy from Newegg.


"I want people to see my movies in the best formats possible. For [Paramount] to deny people who have Blu-ray sucks!" -- Movie Director Michael Bay














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