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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  This bid was later withdrawn, with Blockbuster citing market changes.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 techpro on 10/22/2008 5:18:29 AM , Rating: 0
So how well versed are any of you in retail exactly as well as electronics because commission ended back in 2001. I was one who got the ax when Circuit...the last one at my store to have commission in electronic retail got rid of it so to say someone is pushing a product on you for commission is ignorance mainly but also you have to look at other factors as to why people offer this stuff. 1 retailers are there to provide a product, good, better, and best right? which is why consumers go there to have multile options. 2. retailers are there to make money. In all reality if you look at figures ordinary cables work but they arent shielded as well and they dont compare to a high end cable period, ive researched it and stand by it. Also yes they do cost more but for people looking for the best possible solution they have, cheaper is not always better. As for your talk about service plans, Ive worked at many retailers before i moved on and the amount of people I turned away because I couldnt help them compared to the people I helped because they had a service plan far outways itself. Could you buy a new car outright without car insurance if you totalled ur car? prob not and in this economy I can almost guarantee it even. Same goes for electronics. Most people cant pull enough money out there ass to buy a new pc or HDTV if it fails and theyre out of the mfg warranty which btw sucks balls in case you havent read the fine print. Service plans and different quality accessories are here for a reason, because customers want the option to choose and in retail if u have a good sales person, they will offer you what will work best for your needs not what only makes the company money... Obviously theres stores who have the flipside and do just the opposite...sell sell sell but where I come from we did it right and there were customers who declined...fine thats cool and move on.
Btw consumer reports is based on what most ignorant consumers report not an actual fact based survey, so the accuracy if youre looking for it is not there. I can say ipods suck because I had a bad experience with it but compared to the millions that have been sold what does a few thousand mean? not too much, which regardless of reviews or bad customer experiences they still are the most sold mp3 players in existence(havent owned one it was just an example)


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.


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