Print 73 comment(s) - last by JonnyDough.. on Nov 5 at 7:42 PM

Circuit City to close 20% of its stores by year's end.

DailyTech reported in late October that Circuit City was on the brink of closing 150 stores and slashing more jobs. Circuit City's stock price has dropped over 90% since the start of the year and this past Thursday, the company was warned that it could be booted from the New York Stock Exchange.

It appears that that closing time is finally arriving for what's left of Circuit City's nationwide chain. The Consumerist reported today that Circuit City plans to close 155 of its 711 stores nationwide.

According to sources close to the company, employees of the affected stores were told this morning about the closings. The store closings will be effective 12/31/2008 and according to at least one report, Firedog and car installation employees will likely be fired within 48 hours.

As for what will happen to the closing stores, The Consumerist provided this commentary from an insider:

A team of liquidators will be coming in and taking control of the store. They will set prices as they see fit, and price match guarantee, employee discounts, CC circulars, and the new one price guarantee are all out the window. The price you see is the price you will pay, although it ought to be at a bit of a discount. Firedog services as well as car audio installation are gone immediately. Returns and warranties have to be taken to a CC that's not closing. No new stock will be delivered, we just gotta crank away and sell off everything, and when it's sold, we hit the road.

For more information about the layoffs including a letter sent to affected Circuit City store, you can head over to The Consumerist.

Updated 11/3/2008
Circuit City today officially announced its plans to close 155 stores which are located in 55 markets across the United States. The 155 stores being closed accounted for $1.4 billion USD in sales for fiscal 2008 according to a statement released by the company.

You can view the full corporate press release here along with a full list of all 155 closing stores here [PDF].

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RE: Only 20%?
By theapparition on 11/3/2008 9:54:16 AM , Rating: 2
You do know that share price doesn't really affect company performance. A cheap valuation only leaves you suceptable for a takeover, but doesn't affect any internal organization.

Looks like the stores getting hit the hardest are in CA, IL, and OH.

RE: Only 20%?
By joemoedee on 11/3/2008 1:00:26 PM , Rating: 2
They're pulling out of the Atlanta market, which is pretty noteworthy.

I'm shocked that they're getting rid of my local store, the closest Best Buy is a 7 mile drive away, and this leaves two counties, ~200k people, without a electronics store.

(Plus the nearest BB typically is full of completely unhelpful employees, if they even bother to talk to you.)

I can see them getting out of the Atlanta area itself, Fry's and BrandsMart have taken a huge chunk out of their market, but not the suburbs.

RE: Only 20%?
By Ringold on 11/4/2008 12:52:18 AM , Rating: 2
If consumers expect a company to go bankrupt, they might avoid making large purchases there, for fear of not being able to get service or make returns if they go under.

Completely different industry, but I read recent estimates that if GM or Ford entered bankruptcy protection, their sales may fall 25% immediately just because people, rightly or wrongly, would assume they'd have a car with no one backing it up with service or spare parts. To jump to yet another industry, I think Cessna sales don't fall as much as some of the other guys because people figure Cessna is eternal, where as Piper may disappear any day now.

But also, a stock doesn't get 36 cents for no reason at all; it's earnings per 36-cent share is -$3.68. But you're definitely right on one thing; it looks like for a cool 60 million bucks or so, you too can be the proud owner of a failing retailer! What is that, real-estate value only? :(

RE: Only 20%?
By theapparition on 11/4/2008 7:25:57 AM , Rating: 2
You're confusing 2 separate issues.

When you go public, you sell public shares in your company at market rate (IPO). You then have no control over those shares, as they are traded publicly, with investors speculating on your company's performance.

But as a company, you only reap the benefit of the initial IPO......that's your cash, and no one can take it away. Assuming your company free falls from an initial IPO of $20/share to $.01/share (assuming you haven't spent all that money) you can always buy back your shares and take the company private again. Obviously it's a little more complex than that, but I'm sure you already know that.

I just wanted to dispel the myth that low share price does anything to affect a companies bottom line. CC's stock price could go to $.01/share forever, be delisted......and still, if they were actually profitable, never come close to claiming bankruptcy.

Sadly, it's the profitability part that doesn't look to good for them. However, all is not lost. K-Mart's financials looked pretty damn dire a decade ago, look at their turn-around.

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