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  This bid was later withdrawn, with Blockbuster citing market changes.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


"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis














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