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  This bid was later withdrawn, with Blockbuster citing market changes.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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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
"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.

"My sex life is pretty good" -- Steve Jobs' random musings during the 2010 D8 conference

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