Circuit City to close 150 stores?

By on October 20, 2008, 2:10 PM
Circuit City is weighing its options in order to avoid filing for bankruptcy. According to a report in The Wall Street Journal, citing the ever-ubiquitous “people familiar with the matter,” one such option would be to shut down at least 150 of its locations and cut thousands of jobs.

The move would reportedly free up $350 million from inventory that could be used to pay off some of the company's debt. If the retailer does announce store closings, you can almost certainly count on fire sale prices as part of that $350 million liquidation – but consumers will probably be hesitant to buy big-ticket flat screens, computers, and other items if they think Circuit City won’t be there to take returns and honor warranties.

It would be a shame to see Circuit City disappear, but perhaps their own management is to blame given their history of refusing buyout offers – the company turned down an $8 a share offer in 2003 and $17 per share in 2005 from Highfields Capital Management, and recently blew a shot at being acquired by Blockbuster for “at least” $6 a share.




User Comments: 5

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DarkCobra said:
Well I predicted they were going in another posting just the other day. This confirms their accelerated demise. I agree with the author's comment that it is indeed a shame because it was those in charge who mismanaged this otherwise decent company into oblivion . . . not the ground employees who did their best. Again, we'll see the employees get pink slips while the top folks parachute out with what's left of the profits.Closing 150 stores (a very significant number) will in the short-fall infuse them with some cash with most of it merely going to creditors. However, the closing of so many stores will also result in an enormous drop in revenue as well. Soon Best Buy will be the sole monopoly in large brick and mortar electronic giants.
tedster said:
CC has been under bad management and increased competition for quite some time. Their books are so bad that even Blockbuster video dropped their takeover bid. I am quite surprised they have lasted this long. It's too bad, because during the 80s, this used to be a decent store. but CC slowly decayed with poor customer service and with ****** who did nothing to help the consumer except push sales.
old101 said:
I would be sorry to to see them go. Have been a long time satisfied customer for big and small ticket electronic products.In my opinion they have the best returns policy. No muss, no fuss, just replace the product.
Poertner_1274 said:
I used to work at CC, and honestly it surprises me it took so long.Actually since the day I quit working at CC I have never been back into one. That was 6 years ago!!!
mistrtim said:
The collapse of major financial institutions was bound to have consequences through the entire economy of not only the US, but also with all countries who deal with the US. China has companies that are already closing their doors because of the major reduction of orders from the US. (I'm not complaining there btw)Canada is also going to feel major pain as a result of this meltdown.It's amazing to think that we've come to this. We let major companies ship our high paying manufacturing jobs across the oceans, and converted more and more to a service based economy. The problem is..thone wage levels can't support the lifestyles we became accustomed to and see on TV.We need to rethink the whole system because at this rate WE will become the newest 3rd world countries. With more and more people losing their homes. might we begin seeing shanty towns like in the Great Depression?
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