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bid was later withdrawn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
10/22/2008 9:28:34 AM
...has done a great job of reducing pricing across the board. They're one of the main motivators for price drops in electronics, and one of the more frequently price matched retailers (excluding Fry's, who doesn't qualify based on having terrible customer service and repackaging used product). Good riddance I say, let the other retailers get a higher market share, and a higher profit per unit sold by reducing this "we'll sell for less and not make any profit if we don't sell a $100 HDMI crap. It's good for business as a whole.
"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
Quick Note: Moto X Gets Mad for the Month of March
March 7, 2014, 5:14 PM
Staples Closing 225 Stores Across North America
March 7, 2014, 1:24 PM
HP Launches $170, 8" Android Tablet
March 7, 2014, 8:09 AM
Sony Computer Entertainment America CEO Jack Tretton Stepping Down
March 6, 2014, 8:52 PM
Apple Won't Let UK Sons Unlock Their Deceased Mother's iPad
March 6, 2014, 12:44 PM
Benchmarks for NVIDIA Tegra K1 Hit the web
March 6, 2014, 8:57 AM
Most Popular Articles
Facebook Kills Popular Messenger App for PCs
March 1, 2014, 4:01 PM
Mt. Gox Bitcoin CEO Can't Stifle Grin as he Bows in Apology for Bankruptcy
February 28, 2014, 5:00 PM
Bitcoin King: Mt. Gox CEO Mark Karpelès' History of Arrests, Firings
March 5, 2014, 9:05 AM
Two More Microsoft Executives Leaving the Company
March 3, 2014, 4:38 PM
USAF Moves Forward With Long Range Bomber Program Despite Budget Crunch
March 4, 2014, 9:44 AM
Latest Blog Posts
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
Global Cyber Espionage Concerns Reveal Growing Cyber Armies
Nov 29, 2013, 11:04 AM
Is The Period Becoming an Expression of Anger?
Nov 26, 2013, 2:02 PM
NSA and Congress -- You Will Never Kill the Constitution, It's an Idea
Nov 10, 2013, 2:00 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information