Report: Circuit City Mulling Closure of 150 Stores, Massive Job Cuts
October 20, 2008 3:02 PM
comment(s) - last by
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.
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
bid was later withdrawn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.
This article is over a month old, voting and posting comments is disabled
Why do some seem happy for others misfortunes and loss of local competition?
10/20/2008 6:19:21 PM
When all the B & M stores are gone, where are you going to go and try out stuff that you are interested in buying. I buy most of my computer components online, but I need to personally eyeball and hear some items. TV screens, computer cases, monitors, speakers, cameras are some of the thing that I need to see, hear and feel before I buy them. After CompUSA closed there is no place around here to personally look at computer cases in the flesh. I for one, don't want to be limited to looking at pictures at Newegg when I choose a new HD TV. If you don't like a store, by all means avoid it, but why do some seem so happy when a chain is about to close and the employees lose their jobs. The more local competition the better!
RE: Why do some seem happy for others misfortunes and loss of local competition?
10/21/2008 8:33:37 AM
Agreed. A processor is a processor. But a TV, I want to see it before I buy it. Same with a surround sound system. And if I'm going to go into a store to see something, I'm going to buy it there. I'll pay a little more for the convenience of bringing it back if I have a problem.
"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive
Blockbuster Says "No" to Circuit City Purchase
July 2, 2008, 12:00 PM
Blockbuster Makes Public Offer to Buy Circuit City
April 14, 2008, 10:22 AM
TigerDirect's Parent Company to Acquire 16 CompUSA Stores, CompUSA.com
January 7, 2008, 10:50 PM
Best Buy Shines Brightly as CompUSA Fades Away
December 20, 2007, 2:17 PM
CompUSA to Close All Stores After the Holiday Season
December 8, 2007, 12:14 PM
Retiree Sues Apple For $7,500 for Wiping Honeymoon Photos From His iPhone
November 30, 2015, 10:23 AM
iPhone 7 May Pack 3-4 GB Memory, More Storage; 4-Inch Comeback is Rumored
November 20, 2015, 10:12 PM
OnePlus One, OnePlus 2 Will Receive Android Marshmallow in Q1 2016
November 16, 2015, 9:58 AM
Lenovo Whoa: Motorola Droid MAXX 2 and Turbo 2 Break Cover in Leaks
October 26, 2015, 3:12 PM
Leak: Apple Preps for First Real Android App Foray With New Apple Music App
October 24, 2015, 1:59 PM
Pepsi Smartphone? Empty Calories Coming Soon to the Midrange
October 12, 2015, 11:41 PM
Latest Blog Posts
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information