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bid was later withdrawn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
RE: My $0.02
10/21/2008 7:52:49 AM
"CC stores are grungy and even if they are right across the street from a BB, they manage to be in the run-down shopping center. Housekeeping and appearance matters to the high spending shoppers that buy monster cables & top tier products."
In my area, the exact opposite is true. Circuit City is constantly remodeling their stores to keep them neat looking, while the Best Buys look like a messy Wal-Mart, with products slung all over the place and out of their home locations. Circuit City employees actively seek you out, but Best Buy employees are too busy gabbing with each other to help you, and when they see customers coming, head the other way. Not to mention when you get one that does want to help you, they don't know that much.
CompUSA however had the worst customer service in my area and now they are gone.
RE: My $0.02
10/21/2008 7:56:36 AM
heh, both CC and BBY in my area are like your BBY.
"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)
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
Amazon Releases New and Refreshed Kindle Fire Tablets, Announces Fire OS 4
September 17, 2014, 10:23 PM
Apple Launches iOS 8 for iPads, iPhones
September 17, 2014, 1:54 PM
Apple Cripples NFC in iPhone 6, 6+ With Developer Ban
September 17, 2014, 1:00 PM
5.7" ZTE ZMAX "Phablet" Coming to T-Mobile Sept 24 for $252
September 17, 2014, 11:50 AM
Sony Forecasts $1.7B "Impairment Charge" Due to Poor Smartphone Sales
September 17, 2014, 9:40 AM
More Evidence Points Towards 1GB of RAM for iPhone 6, iPhone 6 Plus
September 16, 2014, 3:35 PM
Most Popular Articles
Dell Announces "World's Thinnest" Tablet: The Venue 8 7000 Series
September 11, 2014, 8:51 AM
Quick Note: Buy an Xbox One Sept 7-13, Get a Free Game
September 4, 2014, 10:42 AM
Apple Announces Its Smartwatch: The $349 Apple Watch
September 9, 2014, 2:09 PM
T-Mobile Launches Un-carrier 7.0, Beefs Up Wi-Fi Calling
September 11, 2014, 2:56 PM
Russian Hackers Compile List of 10+ Million Stolen Gmail, Yandex, Mailru
September 11, 2014, 11:41 AM
Latest Blog Posts
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information