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Circuit City files for bankruptcy protection

Circuit City files for bankruptcy protection

The well-known logo might disappear from US streets unless the company can use a $1.1 billion loan to return to profitability.

Our American visitors will be saddened – or not, depending on your particular viewpoint – at the news that US high street computer giant Circuit City has filed for Chapter 11 bankruptcy protection.

According to BetaNews, the fifty-nine year old company – which only last week announced a programme of job cuts and store closures that would see its workforce drop by 17 percent and a whopping 155 shops closed for good – has encountered further problems, with concern over cashflow and the company's ability to pay its vendors for stock escalating “considerably.” The credit crunch hasn't helped things, either: with consumer spending down and cashflow looking weak, vendors are demanding cash up front rather than extending the traditional lines of credit for stock the company will need to see it through Christmas.

Current CEO James Marcum issued a statement yesterday stating that he realised that “there is never a good time for individuals to be impacted by decisions like these, and we deeply regret the effect this has on our associates. I want to thank them for their continued loyalty and dedicated effort as we go forward with the belief that implementing long-term and lasting change to our business will come by satisfying our customers, one at a time.

The announcement of the Chapter 11 filing sent the company's share price tumbling 56 percent, totalling a 99 percent drop from the 52-week high of $8.24 it once enjoyed. Despite this bleak outlook, the company is still hoping to keep afloat: a $1.1 billion loan will ensure that it can keep stores open during the busy holiday period, while the closure of 155 stores described as “underperforming” and loss of 7,300 jobs should help trim the bottom line. Let's hope, for the sake of the company's remaining employees, that it can get through this tough time unscathed.

Do you believe that Circuit City can make it out of Chapter 11, or does the company need a radical rethink to dig itself out of this hole? Share your thoughts over in the forums.

18 Comments

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TreeDude 11th November 2008, 14:36 Quote
Their stock has been steadily falling and now sits at $.10 (was $.20 before the bankruptcy announcement). Could be a good buy if they rebound next year. I hope they do, I don't want Best Buy to be the only major electronics retailer out there.
pizan 11th November 2008, 15:41 Quote
a few friends and i are taking a little trip to one of the stores thats closing to see what we can squeeze out of it
pendragon 11th November 2008, 19:08 Quote
that's sad.. I always liked Circuit City :-/
HourBeforeDawn 11th November 2008, 23:16 Quote
saw this coming, they really need to improve big time. I dont ever go there anymore since I started going to BB and buying Online.
Stuey 11th November 2008, 23:31 Quote
Quote:
Originally Posted by pizan
a few friends and i are taking a little trip to one of the stores thats closing to see what we can squeeze out of it
Good luck. CC is using the same liquidators that CompUSA used, which means they'll mark up the prices before they discount them.

This was inevitable - last year they reported very poor sales even before the money crunch started.
The_Beast 12th November 2008, 00:11 Quote
That sucks


Best Buy isn't my favorite place to shop for eletronics
DXR_13KE 12th November 2008, 00:21 Quote
why don't they pay sensible wages to the fat cats?
OtakuHawk 12th November 2008, 00:45 Quote
Quote:
Originally Posted by pendragon
that's sad.. I always liked Circuit City :-/

circuit city used to have good sales and support ppl. I knew several of them. they knew their ****.

then they got the brilliant idea of firing them all and replacing them with minimum wage morons.

and then they couldn't understand why their sales numbers dropped.

fark them. I hope the management ends up penniless under a bridge.
Major 12th November 2008, 00:51 Quote
Quote:
Originally Posted by DXR_13KE
why don't they pay sensible wages to the fat cats?

Same goes for every other business / organization etc in the whole world.
docodine 12th November 2008, 02:39 Quote
Quote:
Originally Posted by Stuey
Quote:
Originally Posted by pizan
a few friends and i are taking a little trip to one of the stores thats closing to see what we can squeeze out of it
Good luck. CC is using the same liquidators that CompUSA used, which means they'll mark up the prices before they discount them.

This was inevitable - last year they reported very poor sales even before the money crunch started.

Strange, I got great deals at the closing CompUSAs... Best one was a Logitech G15.

It was marked down to $60, and it was sitting on a half-price rack. On top of that, there was a $30 rebate on the box. It probably was a mistake, but after about a month, the rebate went through.

I paid several cents for a pretty nice keboard.

I might stop by the local Circuit Cities, I need a copy of Vista... They were <$60 at the closing CompUSAs, hopefully similar at the Circuit Cities.

And by the way, Target and Wal-Mart could probably rival Best Buy in their electronics departments within a few years.
jhanlon303 12th November 2008, 02:59 Quote
Where I live we have/had Circuit City and CompUSA right next to each other and across the street from BestBuy and WallyWorld. I'm sad to say that in my 6 decades on this planet I have never bought anything from Circuit City.
Am I too old to learn? The CompUSA close outs were crap. Any hope of CC having any deals?

John
Amon 12th November 2008, 04:12 Quote
The chain is branded as "The Source" in Canada. I will raid the nearest store tomorrow after work.
chrisb2e9 12th November 2008, 04:21 Quote
Quote:
Originally Posted by Amon
The chain is branded as "The Source" in Canada. I will raid the nearest store tomorrow after work.

not radio shack! noooooo!

Oh well, cant remember the last time I actually bought something there.
Firehed 12th November 2008, 06:14 Quote
I'll be glad to see them go, massive suckfest. Consistently terrible service, bad prices, poor policies, and unfriendly staff.
knuck 12th November 2008, 06:46 Quote
Quote:
Originally Posted by Firehed
I'll be glad to see them go, massive suckfest. Consistently terrible service, bad prices, poor policies, and unfriendly staff.

I was going to say the exact same thing


This store always sucked.

It was trying to be a small Best Buy but couldn't
It was trying to be a small Toys' R Us but couldn't
It was trying to be a [Insert real computer store name] but couldn't
It was trying to be a serious electronic store but couldn't

All it had were annoying salesmen (can't be blamed for trying to get commission, but still) and ridiculous prices (9$ for 4 AA batteries that lasted an hour and a half in a CD player)
notatoad 12th November 2008, 08:04 Quote
somebody said that the source was a different entity despite the circuit city branding and would not be closing. :? so maybe no closeout sales for us canadians.
Volund 12th November 2008, 14:07 Quote
hum, may go over and check it out... perhaps they have some games up for cheeps ;)
naokaji 12th November 2008, 15:35 Quote
Let's welcome America to Europe where Pc retailers that actually stock a big range of HW are long extinct, margins on pc parts are simply too low these days for retail stores to be able to survive on a big scale.
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