http://biz.yahoo.com/ap/081110/circuit_city_bankruptcy.html NEW YORK (AP) -- Circuit City Stores Inc., the nation's second-biggest electronics retailer, filed for bankruptcy protection on Monday but plans to stay open for business as the busy holiday shopping season approaches. It filed under Chapter 11 of the bankruptcy code, which will allow it to hold off creditors and continue operations while it develops a reorganization plan. The Richmond, Va.-based company has been struggling as nervous consumers spend less and credit has become tighter, and the retail industry overall is facing what's expected to be the weakest holiday season in decades. Circuit City also said it would cut 700 more jobs, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers. "This isn't a surprise," JPMorgan analyst Christopher Horvers said, adding that the reorganization could help the company get out of leases for certain bad store locations. Circuit City, which has had only one profitable quarter in the past year, has faced significant declines in traffic and heightened competition from rival Best Buy Co. and others. It said it decided to file for bankruptcy protection because it was facing pressure from vendors who threatened to withhold products during the holiday season. "At the end of the day I think it's really about an inventory position," Horvers said. "If they can get inventory into the stores, I can think they'll remain competitive." The company's biggest creditors are its vendors: Hewlett-Packard has a $118.8 million claim followed by Samsung ($115.9 million), Sony ($60 million), Zenith ($41.2 million), Toshiba ($17.9 million) and others. Smaller creditors include GPS navigation system maker Garmin, Nikon, Lenovo, Eastman Kodak and Mitsubishi. Horvers added, "I think it's encouraging that they were able to secure financing." Circuit City said it had lined up $1.1 billion in loans to provide working capital while it is in bankruptcy protection. That replaces a $1.3 billion asset-backed loan it had been using. Loans to operate while in bankruptcy are called debtor-in-possession, or DIP, loans. "That's a big DIP in the current market," said John Penn, a partner at Haynes & Boone who is not involved in the case. "To secure that size DIP now is quite a achievement. With the news of the cuts last week -- and vendors wanting to know they can get paid -- having a recognizable source like a DIP can calm a lot of vendor concerns." The company said in its filing that it had $3.4 billion in assets and $2.32 billion in liabilities, as of Aug. 31. Circuit City Stores Inc. announced a week ago it planned to close 155 of its more than 700 U.S. stores by Dec. 31. The stores are spread throughout 28 states, including multiple locations in areas like Phoenix and Atlanta. It is laying off about 17 percent of its domestic work force, which could affect up to 7,300 people. The company also said last week that it will further cut back on new store openings and planned to work with landlords to renegotiate leases, lower rent or terminate agreements while it dealt with tightening credit from its vendors. Circuit City posted a wider second-quarter loss in September with a 13 percent decline in sales at stores open at least a year. The company has been under new leadership since late September when Chief Executive Philip J. Schoonover agreed to step down. He was replaced by James A. Marcum, who is now vice chairman and acting president and chief executive. Shares in Circuit City have traded under $1 for more than a month and the company received a warning about that last month from the New York Stock Exchange.
That really sucks...Before Best Buy, I would go there. On the bright side, will there be good deals??? I gotta get my parents a new tv...their big tv sucks.
They are closing the store here in Warner Robins, GA. They just opened last year in October or November. They are also closing a store in Macon, but just opened a new one in the last couple of months up there. I hate Circuit City anway though. Best Buy is better in my opinion.
I would have rather seen worst buy than CC file, but such is life...I've bought the bulk of my electronics stuff from CC, because I like their service and their coupons... Now I need to wait on their bankruptcy sale...
I worked for Circuit City in Houston for 6 years, back in the early 90's. In fact, I was on the team that Grand-Opened the Houston market. It was really something back at that time, because there was no competition really. There was Conn's, Highland, Computer City, places like that.. but nothing like what Circuit City offered to the customers at that time. Best Buy came into the market a couple of years later, but at that time, BB was basically in the same position that CC is in now - complete disarray, bankruptcy, and the sharks were circling. BB however threw themselves on the sword, hired a consulting firm to tell them how to get out of their mess, and they managed to get back on their feet. The problem with Circuit City was that it paid its employees on commission rather than hourly. And they only really paid for selling the extended warranties. The profit margins became so slim on competing products, and in the market in general, that the only real profit was in the selling of accessories and warranties. An employee was hired to sell computers, or T's, or boom-boxes, or whatever, but all they really cared about was that your percentage of warranties sold in relation to your overall sales was 6% or higher. Yes, it sucked. Customers generally do not like paying extra for service policies unless it happens to be a very expensive product or something with a lot of moving parts, such as camcorders. It was a high-pressure environment, and frankly I would not have enjoyed shopping there. Best Buy came into the market with the opposite approach - tell the customers that they don't need a service policy. It worked, sort of. Because at that time Circuit City still trained its sales people on how to better match the customer with the right products (instead of just handing the cheapest thing on sale), their returns were lower and their profit margins were still actually higher. BB moved a lot of boxes, but at very little profit. About 96 or so, BB finally realized that they were not as profitable, and finally figured out why: the selling of extremely profitable service policies. Unfortunately, this was about the time I jumped ship and was hired away from CC to go to BB. Out of the frying pan and into the fire, so to speak. The only difference was that BB had no idea how to train its people to sell the things. So once it was a high-pressure sales environment, only this time was just SELL THEM OR ELSE! No actual guidance, no training, nothing but constant beratement and threats. I still shop in BB once in a while, but I hardly ever go into a CC any more. I had been treated so badly by management of that company, and had seen some horrific treatment of other people too, that when I left, I told myself that nothing bad enough could ever happen to that company. They deserve every bad thing that comes their way. Best Buy was only marginally better, except that instead of riding their hourly employees like dogs, and paying for their sales by cutting the pay on certain items (like CC did - example: an item that sold for $200, might have paid $10. But CC would put it on sale for $185, and then pay $0.25 for the item, therefore paying for the sale primarily out of the paychecks of their employees), BB instead simply rode their 'Assistant Managers' like dogs, by refusing to allow the scheduling of enough hourly employees to cover most shifts. This is why you can walk into a store like BB and never find an an employee in certain departments who can help you - there literally aren't any scheduled to be working there at that time. Or the one poor kid working has 10 people waiting for him. It's ridiculous. Again, not a place any sane person would want to work. Fry's is the place to go, even if I have to drive a long way to get there. As for Circuit City, I hope the ground opens up and swallows that whole mess.
Tweeter is closing too. http://www.forbes.com/feeds/ap/2008/11/04/ap5644359.html [rquoter]Mass. electronics retailer Tweeter closing Associated Press 11.04.08, 9:00 AM ET BOSTON - Home electronics retailer Tweeter Opco LLC has notified the state it is closing its Canton headquarters as part of a "permanent entire company closing." The company's letter received Monday by the Massachusetts Executive Office of Labor and Workforce Development said the headquarters facility will close by Dec. 31. Tweeter filed for Chapter 11 bankruptcy protection in June 2007. A month later, it accepted Schultze Asset Management LLC's $38 million bid. The Boston Globe reports that liquidators Hudson Capital Partners and Tiger Capital have bought Tweeter, and said Jim Schaye, president of Hudson, confirmed the liquidation. A Tweeter executive refused comment to The Associated Press. Hudson and Tiger officials did not return messages for comments. Tweeter has 94 stores in 17 states.[/rquoter]
This is not surprising in the least. I went to pick up a new surround sound system at the San Francisco Circuit City yesterday. Well, I paid for it, then took the ticket over to customer service to pick it up. After about 10 minutes of confusion some guy comes back and tells me that they don't have anymore. Another dude comes out and asks who sold it to me. Another guy comes and looks around the shelves for it. Then they both go to the manager and tell him to give me a refund. At this point, I'm like screw it. Give me my money and I'll take my business elsewhere. Finally a 5th guy comes and locates one in the store, behind a different one. To have 5 different people help on a $450 purchase is ridiculous, and just shows you how out of touch these guys are. Bunch of r****ds over there. The 5.1 system is pretty nice though, Panasonic 1250W.
i worked at circuit city in greenspoint for a few months in college, in the warehouse. yes, sales people were stressed out back then. but like nero pointed out, they didn't have much competition moving into the market, before best buy. hell, i remember when department stores like foley's and macy's used to sale high end electronics. anyway, even back then you could see that managment wasn't all that. for instance they opened up a store in the woodlands and that pretty much eliminated the greenspoint store because that's where all the people who bought the really expensive items were from.
Its not so much that the economy sucks but has more to do with companies with really bad business plans failing. This is the Darwinism in capitalism setting in motion. I never shopped at circuit city. Poor layout, poor selection and I could always find a better deal somewhere else.
greenspoint or woodlands, I worked in greenspoint, nov 96 to april 97 not long. i was there when some manager got fired for stealing a compaq computer
Economy is the last nail in the coffin. When you are barely paying bills, you can't afford the revenue decrease that is going on in retail. I really won't miss CC. I've never really had a good experience at one. They have to have an awesome sale for me to even go.
