Smart Car of America Forum banner

1 - 16 of 16 Posts

·
Ex Admin/mod.
Joined
·
9,491 Posts
Discussion Starter #1
From c|net:
When Circuit City announced on Monday that it was closing 155 stores amid financial trouble, it didn't surprise me at all. If you've been following this page over the past year and a half, you know that I've been saying since the beginning that Circuit City doesn't have the chops to stick around and compete with Best Buy.
(Credit: Circuit City)
And although yesterday's announcement was probably a shock to some at the company, it shouldn't have been. For the past few years, Circuit City has been the victim of one of the steepest declines this industry has ever seen.
Right now, the stock is in danger of being delisted from the New York Stock Exchange, thanks to a share price that can't make its way above the $1 mark. In fact, even after announcing the closure of 155 stores, the company's shares rose only 10 cents in daytime trading, bringing its stock price to 36 cents per share.
We can't forget, upon analyzing Circuit City, that this isn't the end of store closures, nor the beginning of financial success. The company is now going to engage landlords in negotiations to "aggressively" reduce rental rates in stores nationwide.
Once that initiative fails--and it will--Circuit City will have no other option but to close even more stores as it tries to find the right balance between size and financial stability.
To make matters worse, it will be delisted from the NYSE. I simply don't see any way the stock price can gain almost 70 cents in a short amount of time to get regulators off the company's back. And once that happens, any influx of cash Circuit City was hoping for will be lost, and it will be forced to close even more stores.
The end is near for Circuit City. Its decision to close 155 stores was an opening salvo in the hopes that shareholders would take notice and believe the company had the ability to turn things around.
Unfortunately for Circuit City, the shareholders didn't fall for it.
The company may be an attractive target for at least one company in the industry. After all, CompUSA was picked up by TigerDirect, and now some CompUSA stores are open in Florida.
But then again, maybe Circuit City isn't as attractive to acquiring companies as it wants to believe. Maybe companies realize that Circuit City is a dog and will never be able to compete with Best Buy in brick-and-mortar stores or Amazon.com online. Maybe they realize that with a stock that's in serious danger of being delisted, it has no hope of repairing shareholder confidence. And maybe they realize that Circuit City's days are numbered, regardless of the amount of cost cutting and expense slashing in which the company engages.
I've said it once, and I'll say it again: Circuit City is a dying company with no viability to, well, anyone. With Best Buy and online retailers squeezing it out of the market, I honestly don't believe that Circuit City will be around even a year from now. Strapped for cash, facing an avalanche of competition, and in desperate need of solid revenue, Circuit City looks like company that simply can't survive in today's hotly contested environment.
The game is over. And Circuit City lost.
Source: http://news.cnet.com/8301-13506_3-10082061-17.html?part=rss&subj=news&tag=2547-1_3-0-5
 

·
Lifetime Member
Joined
·
11,307 Posts
Seen this one coming for years, I always got bad vibes when I went in there and blamed it on bad Feng Shui.

Guess I should ride by there and see if they are on clearancing yet. Picked up speakers 2 weeks ago from another electronics store that went out of business.
 

·
Registered
Joined
·
11,891 Posts
The dicision to close before christmas may indicate they couldn't get financing to stock those stores for the holiday season.
 

·
Banned
Joined
·
4,888 Posts
Circuit City used to be my primary electronic shopping center, then I would go find the same thing at a lower price somewhere else. To bad, they were a good resource.
 

·
Registered
Joined
·
1,860 Posts
Careful what you wish for

The CC in my area has better selection then our BB store, and knowledgable employees still...I know, a rarity in these type stores these days

Competition in our capitalistic society is always a good thing

Sorry to say, I hardly ever buy there because I am a selfish internet buyer...lower cost, no taxes, and I search out free shipping or negotiate for it....

The current state of the art high end computer I will be building here in my hotel room over the next 6 weeks will all be bought on the web for well under $1000 and whoop any $3500~$4500 box you can buy…. except the most exotic bleeding edge gamers stuff with quad $800 video cards

This Xmas we are finally stepping up to 50+ inch HD LCD and building a complete home theater all on the web and I will literally save thousands vs. buying locally

If my BB or CC goes belly up it will be a shame... they at least have product I can compare and touch...
 

·
He's not mine
Joined
·
9,607 Posts
I've spent many thousands of dollars at Circuit City. I was appalled a few years ago, when I heard the corporation dismissed its long time employees because they were making too much money, and replaced them with lower waged newbies. There was no ground for age discrimination, since some of the long timers were shy of 30 years of age.

I like them when I need to pick up an item and don't want to wait for delivery. I've found their personnel to have VASTLY varying knowledge concerning the items they sell. Hit or miss. To me, they are the McDonald's of consumer electronics. Everyone knows Big Macs make you fat. :p
 

·
Registered
Joined
·
189 Posts
I agree NCC1701

I had a really bad Customer Service episode at Circuit City. I was trying to exchange something and the clerks were making a #^&^%$ mess out of the transaction. I asked to see the manager but got no help. (I could see the manager through the door and he refused to come out and talk to me).:clown:

Well, after refusing to step back into the store for a year or so, I had decided to start going back in. Then they decided to shaft their employees with that fire/hire at half price deal.:twak:

Needless to say, I still haven't stepped in a Circuit City in several years.
Bye Bye CC
 

·
Registered
Joined
·
917 Posts
I tried to buy a simple home theater system in a box at CC. The box was a bit too heavy for me to lift by myself so I asked for some help. 15 employees all standing around with nothing to do and nobody would help me. It took 15 minutes to find somebody who could get the box to the front door (he must be the dumb one because he was actually doing his job). Everybody just kept looking at each other expecting somebody else to help the one customer (me) that was in the store that day trying to buy something. After I left there were no more customers and I guess they all went back to watching the TV's. No wonder they failed.
 

·
Registered
Joined
·
841 Posts
RICHMOND, Va. – 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 season approaches.

It said it decided to file for bankruptcy protection because it was facing pressure from vendors who threatened to withhold products during the holiday shopping period. The company also said it cut 700 more jobs at its headquarters, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers.

Circuit City 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. Its Canadian operations also filed for similar protection.

Doing so "should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and ultimately position the company to compete more effectively," James A. Marcum, vice chairman and acting president and chief executive, said in a statement.

Shares in Circuit City fell 14 cents, or about 56 percent, to 11 cents on Monday before being halted.

The Richmond, Va.-based company, 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. While the retail industry overall is facing what's expected to be the weakest holiday season in decades, Circuit City's struggles have intensified as nervous consumers spend less and credit has become tighter.

In court documents, Chief Financial Officer Bruce H. Besanko said three factors led to the bankruptcy filing: erosion of vendor confidence, decreased liquidity and the global economic crisis.

"Without immediate relief, the company is concerned that it will not receive goods for Black Friday and the upcoming holiday season, which could cause irreparable harm to the company and its stakeholders," Besanko said in the filing.

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.

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.

"This isn't a surprise," JPMorgan analyst Christopher Horvers said of the bankruptcy filing, adding that the reorganization could help the company get out of leases for certain bad store locations.

Circuit City 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.

"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."

Horvers also found it encouraging that the company was 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 law firm 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 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.

Shares in Circuit City have traded under $1 for more than a month.
 

·
Registered
Joined
·
801 Posts
Sorry for all the Circuit City folks who'll lose their jobs, but they've only got them due to Circuit City's mass firing of their previous sales force. Bad deal all the way around.
 

·
Banned
Joined
·
4,888 Posts
Just saw that Best Buy is sharply cutting it's earnings outlook for 2009 in light of an 8% drop off in sales last month and a worsening economy.
 
1 - 16 of 16 Posts
Top