Circuit City to shut down 567 remaining US stores and cut more jobs
Circuit City to close 567 remaining US stores and cut more jobs: Bankrupt Circuit City Stores Inc., unable to work out a sale of the company, said Friday it will go out of business — closing its 567 U.S. stores and cutting 30,000 jobs. Circuit City became the largest retailer to fall victim to the expanding financial crisis Friday, announcing it will shut down its remaining 567 U.S. stores at the cost of 34,000 more jobs after failing to sell the business.
In this Nov. 10, 2008 file photo, a brightly lit sign is seen at the entryway of breaking news – In this Nov. 10, 2008 file photo, a brightly lit sign is seen at the entryway of Circuit City in S. Portland, …
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Circuit City became the largest retailer to fall victim to the expanding financial crisis Friday, announcing it will shut down its remaining 567 U.S. stores at the cost of 34,000 more jobs after failing to sell the business.
The closure of the nation’s second-biggest consumer electronics retailer spells more trouble for the nations malls, and is the latest casualty of an unprecedented pullback in consumer spending that has claimed KB Toys, Mervyns LLC and Linens ‘N Things.
“Very, very sad,” said Alan L. Wurtzel, son of company founder Samuel S. Wurtzel and himself a former chief executive of Circuit City. “I feel particularly badly for the people who are employed or until recently were employed.”
Richmond, Va.-based Circuit City had been seeking a buyer or a deal to refinance its debt, but the hobbled credit market and consumer worries proved insurmountable. Negotiations for an acquisition extended past midnight Thursday before finally falling through, Circuit City lawyer Gregg Galardi said.
Two potential buyers — Mexican billionaire Ricardo Salinas Pliego, who controls a chain of electronics stores in Latin America, and the Golden Gate Capital private equity firm — considered a shrunken form of the business, retaining as many 350 stores or as few as 180. But Circuit City couldn’t secure the necessary financing or support from vendors.
“This is the only possible path for our company,” acting Chief Executive James A. Marcum said in a statement. “We are extremely disappointed by this outcome.”
U.S. Bankruptcy Judge Kevin Huennekens gave final approval to the liquidation plan Friday afternoon. Some employees were notified that they would lose their jobs and certain stores would begin close-out sales as early as Saturday.
“Since my childhood, that’s been where you go to buy electronics — Circuit City,” said 37-year-old Sonya Webb, who was standing outside a store in Chattanooga, Tenn., watching as an employee set a 46-inch Sony television in her car.
Webb, an administrative assistant at a dialysis clinic, said she usually compared Circuit City, Best Buy and Sears when making purchases, but that Circuit City was always her preferred choice. She said she came to buy the TV after she heard that the stores were closing.
Circuit City said liquidating the stores should last through March, after which they will be closed. A small staff will keep working at the corporate office through that process.
The company’s inventory has a retail value of about $1.8 billion, said James Schaye, president and CEO of Hudson Capital Partners, the liquidator. He said sales will begin with up to 30 percent discounts and will be adjusted as the liquidation continues.
“There’s a lot of great deals,” Schaye said. “If you’re competing against someone like Best Buy, we’re going to be at a much better discount than they’re going to be.”
It was unclear what would happen to the company’s 765 retail stores and dealer outlets in Canada. Galardi told a judge there are still bids for the Canadian business.
Circuit City’s brand value was diminished in the 1990s as it faced tougher competition from Best Buy Co., which built bigger stores in better locations.
Wurtzel has previously said Circuit City didn’t take the threat from Best Buy seriously enough and at some points was too focused on short-term profit rather than long-term value.
Circuit City’s failed turnaround efforts included laying off higher-paid employees, opening smaller concept stores, seeking potential buyers, changing management and closing stores. In 2007, it laid off about 3,400 store workers and replaced them with lower-paid employees. Analysts had warned the move could hurt morale and drive away customers.
Marvin Allen, 46, of Cleveland, Tenn., was at a Chattanooga store Friday shopping for a computer desk. He said the closings were bad not only for the people losing jobs, but also for consumers, because competition helps keep prices down. Allen said he and his wife, Teresa, 54, purchased a television from Circuit City just before Christmas.
“It means fewer places left to compare (prices),” she said.
Credit Suisse analyst Gary Balter told investors that Circuit City’s demise should “further secure Best Buy’s position as the leader.” Shares of Best Buy Co. rose $2.20, or 8 percent, to $29.34 on Friday.
The liquidation of Circuit City follows the worst holiday shopping season since at least 1969. People have slashed their spending as they worry about their job security and declining retirement funds. Already this week, department store chains Goody’s Family Clothing and Gottschalks Inc. filed for bankruptcy protection.
Analysts said the loss of Circuit City will be a particularly big blow to malls, which have suffered from a rise in vacancies as chains have liquidated and now face even more empty space. Circuit City stores range from 20,000 to 25,000 square feet.
“It will bring to market a glut of big box spaces across the country,” said John Bemis, head of Jones Lang LaSalle Inc.’s retail leasing team. “It will have one of the largest impacts on big box real estate across the country.”
Circuit City filed for Chapter 11 in November as vendors started to restrict the flow of merchandise. It had been exploring its options since May, when it opened its books to Blockbuster Inc. The Dallas-based chain made a takeover bid of more than $1 billion, but withdrew the offer in July.
Circuit City said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31. Under court protection, it broke 150 leases at locations where it no longer operated stores and closed 155 stores in the U.S. in November and December.
Pretty soon, the only place you will be able to buy Chinese food is the original Chinese food Store — Walmart.
I think thats their plan all along, and its worked perfectly. i know first hand why these clowns are going under……not answering the phones for days on end pretty much garontees you pissed off customers! Goodbye and GOOD riddance CLOWNS! Well I guess, that old saying is true. What goes around comes around! A couple years ago, Circuit City fired alll there knowledgable employees, and replaced them with cheaper labor. As a small buisness owner I know the old saying you get what you pay for, is true. If you pay minamum wage you get minimum effort & minimum give a s*** from your employees.
The day they fired there people was the day I stopped shopping from Circuit City. It was my small way of showing support for the employees I think got screwed. I know at least 18 people who also stopped shopping there for the same reason.
Yeah, in store help was unhelpful.
When I shop, I go online, find what I want and walk in and buy.
No haggling, no asking questions, I’m ready to buy then and there.
I had to wait twice, on the staff to simply tell me it’s ok to take the item to the front (surround system) or unlock a case kinda deal.(GPS)
Their online system of buying was also misleading.
Placed the order, paid extra for expedited shipping (3-day), received a date of delivery, then…nothing… they sat on the order for days.
I fought them for days about the extra shipping and how poor their system was. They finally didn’t charge me for the adding shipping.
“You’ve got questions, we’ve got answers” did the same thing. Got rid of the true geeks we all need, and hired minimum wage people…
BTW, my son’s best high school friend, very hard worker and a true geek, is currently the manager of a Circuit City store. Not for long..
“Unfortunately, there won’t be a Circuit City after today,” Galardi said Friday.
We’ve only seen the tip of the iceberg. Wait til the commercial real estate markets collapse. It’s going to make the residential side look small. It’s coming and the banks will need MORE money from the government when these huge commercial real estate loans default.
I highly doubt you will see Best Buy going next. I used to work for them back in 2000 when they opened the store in our town. I do remember them buying the company that used to own Media play since that company was in Minn also. well that venture lasted maybe a yr before best buy got rid of them. I guess it may also go back to the time when circuit city got out of the appliance business that the writing was on the wall. That to me was one major thing that kept them going in my opinion. But also poor management is also to blame. sad that happened but even last yr at thanksgiving I didn’t see anybody lining up circuit city the night before. Best buy had a line at 6pm and even at 10 that night they still didn’t have a line. I guess you can say another one bits the dust.
It seems to me i spoke to the managers many times about the ONLY part that mattered..the CHECKOUT!! I watched them leave just one line open and that was also the courtesy counter!! Jesus how dumb can they be or were they??? The only point that matters in retail is when you take the cash…Wal-Mart is STILL the only ones that figured that out!! Oh that’s right..they’re open and doing fine!!!
Circuit city got what they deserved…now they can keep JUST one open while they liquidate everything…but look on the bright side..their payroll was down!!! Stupid ASSES!!! Close and go away!!!!
Their employees were on commission and were not very helpful when you were just looking, they wanted you to buy then and now. And they have higher prices than Best Buy. The bottom line is that Best Buy and Wal Mart had them beat for years and they never changed their business model to compete.
Now here is the kicker for Best Buy. With people not receiving credit as they once did, who is going to go out and buy a HD tv? The only saving grace for Best Buy is that the credit markets have to loosen again or guess what? Best Buy will be done within two years.
Good freakin riddance. These people pi**ed me of one to many times, have not even looked at one of their ads, nor have I been in one of their stores for 2+ years. Now maybe Best Buy will move into my area, ( sadly they are hurting as well) Circuit Citys demise has been to long in coming
Oh you freaking whinners! Wahhh! Every retailer has it’s good & bad points. You pity party pampered pussies piss me off. And for the idiots that blame the economic crisis on the gov’t…the markets are aren’t driven by gov’t. It’s driven by “us”…the consumers & retailers. Lose 30K people…thats 30k who won’t be spending as much as they did before. Try some feeling for the 30K who will be out of jobs. Now we have to add 30K people to the already over saturated ranks of the unemployed. Not of any fault of their own. And for garydvegas – where do you by “non” chinese electronics?????? Smartass. I’d sure like to know. Made In China & Made In Taiwan etc., have been on items longer than you’ve been born. What do your electronics have stamped on them. Dumbass..
It’s Bush’s fault, you know! He and his chronies allowed this economy to get in this shape and force these companies to hire cheaper labor. It’s their fault, and another A1 hit from Bushy! Good work Bush! Be very carefull if you buy anything there, i just bought a brand new laptop there still in the box. When i got home the screen was toast so i took it back to see if i could get another and was told sorry for your luck. A friend purchased an item there and when he got home the box was empty!! He called them and they said the same thing….so buyer beware!
I was anticipating a liquidation and complete closure the day after Xmas which ultimately came to reality less than a month after xmas. Hit the road jack don’t come back no more! Lol! Circut City’s problems have NOTHING to do with the recent economy meltdown…I quit buying from them 2 years ago because they have terrible service, dont answer their phones, and basically dont give a crap about customer satisfaction. In short, they suck moist ass cheese and deserve to be out of business.
They didn’t honor the legal Warranty on their computers so its no wonder they collapsed in financial ruin. I wouldn’t buy from Circuit City after that. Not anything. I went to Best Buy and had excellent service and they honored their contracts with me regarding the electronic products I’ve bought. Sad 30,000 people had to be without jobs but good riddens to Circuit City as their customer serivce wasn’t good, and they signed people up to warranty contracts they didn’t honor. So bye bye Circuit City in good ol’ America.
why is it that alot of folks are laying blame at either GW Bush or Mr. Obama,s door step?????? they are just one person the blame falls one the intire gongress, sennit and most of all us the American people. WE became compacent and allowed ouselfs to think that the govt. would do the right thing and that we as a nation didnt have to watch what our elected officals were doing… with the kind of money and power that Washington has in it we should have been watching them like hawks!!!! we and only we are to blame for this. so ya all need to take responceobility for this and get off you crying box and do something…..like starting a recall of your sent. and congress. I could go on but ya get the drift….
Circuit City to close 567 remaining US stores and cut more jobs: Bankrupt Circuit City Stores Inc., unable to work out a sale of the company, said Friday it will go out of business — closing its 567 U.S. stores and cutting 30,000 jobs. Circuit City became the largest retailer to fall victim to the expanding financial crisis Friday, announcing it will shut down its remaining 567 U.S. stores at the cost of 34,000 more jobs after failing to sell the business.
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