Circuit City files for bankruptcy

GSRBOB

Damn i pretty much have purchased every single piece of HT equipment from CC. Its a shame to see them go. Looks like ill have to find an alternative now.

I wish they would buil a Frys here. I think costco is in the works though.

Knucklehead

o.k. they dont sell the HIGH end stuff, but we all know the reason for a lot of businesses failing....so lets all say it together...WAL-MART!....LOL

polkatese

Just got back from CC. They are offering 36 months interest free financing. Morale seems still ok, the manager is very helpful, other than it seems that they have less Sales Associates this morning. No indication of the impending doom. Tons of discounted xbox and PS games, mostly old stuff though.

polkatese

Fall in. It's over for sure.

Circuit City to shut down
Court approves bankrupt electronics retailer's motion to liquidate and close its remaining 567 stores.
EMAIL | PRINT | SHARE | RSS
By Parija B. Kavilanz, CNNMoney.com senior writer
Last Updated: January 16, 2009: 5:50 PM ET


NEW YORK (CNNMoney.com) -- Bankrupt electronics retailer Circuit City Inc. said Friday it will close its remaining 567 U.S. stores and sell all its merchandise.

The company said it has 34,000 employees.

"We are extremely disappointed by this outcome," James Marcum, acting CEO for Circuit City, said in a statement. "We were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction in the limited timeframe available, and so this is the only possible path for our company."

In a filing with the U.S. Bankruptcy Court for the Eastern District of Virginia, which a judge approved late Friday, Circuit City - the No. 2 electronics retailer after Best Buy (BBY, Fortune 500) - said it had reached an agreement with four companies to start the liquidation process.

The company said the sale would begin Saturday and run until March 31, pending court approval.

The retailer's Web site and call center will cease to operate after Jan. 18.

Circuit City said employees will receive 60 days' notice of the termination.

Employees who are laid off earlier will get pay and benefits for the 60-day period beginning Friday, the retailer said.

Those who remain with the company to assist with the liquidation, will receive pay and benefits.

Circuit City also operates about 765 retail stores and dealer outlets in Canada. The company said its Canadian operations, which employ 3,000 workers, will continue to operate.

The company said it will redeem its gift cards through the liquidation sale, but the cards will have no value once the stores are closed.

"This is very significant. It shows you how bad things are for the retail industry," said George Whalin, president and CEO of Retail Management Consultants.

Whalin said management mistakes over the past few years combined with the recession brought down Circuit City.

"This company made massive mistakes," he said, citing a decision to get rid of sales people and other mismanagement.

What's more, given the credit market freeze, Whalin added that no manufacturer wants to sell to any retailer who doesn't have money to pay for the merchandise.

At the same time, Whalin said there's still a very slim chance that one or more firms that have expressed an interest in buying Circuit City could still buy it out of bankruptcy over the next few days.

"I wouldn't say it's completely over yet for Circuit City, but it's almost over," Whalin said.

Love Goel, CEO of Growth Ventures Group, a private equity firm focused on retailers, agreed with Whalin.

"Circuit City isn't a viable business in its old incarnation when half of electronics sales have moved online," Goel said. "CompUSA and Tweeter also didn't make it for the same reason," referring to two stores forced to close most or all of their locations.

However, Goel speculated that Circuit City could still find a lifeline if Golden Gate Capital, one of the reported lead bidders for the merchant, bought the company and restructured it primarily as an online business with very few physical stores.

"This would eliminate overhead costs, vendor conflicts and other issues," he said. "Circuit City has an almost $1 billion online business. So there is a future for it in that regard."

NPD Group's retail analyst Marshal Cohen warned that no retailer is "sacred" in this environment unless "you have a service model that differentiates you from the competition and keeps pace with changing needs of the consumer."

He said Circuit City was late to the game with its Firedog customer service business, and it didn't resonate with customers as well as Best Buy's Geek Squad was business.

What's more, Cohen said Circuit City found itself in the unfortunate position of becoming the "monkey in the middle" as Wal-Mart (WMT, Fortune 500) aggressively moved into the electronics market with its low prices model, and Best Buy continued to widen the gap with its competitors and dominate as the industry leader.

"Circuit City just got stuck in the middle for too long," said Cohen.

polkatese

Interesting to note that Canadian's CC will continue its business as usual.

pinoygwaping

I bought my lcd in CC last month here in Jersey and I ask the manager about the warranty extended he told me that GE will take it over and I confirmed about by calling the GE company. Too bad electronics in CC is much cheaper than Bestbuy. I feel sorry for the 30000 employees whose going to loose there job.

krabby5

I really hope Ultimate Electronics finds a way to stay afloat. Great prices plus they carry a lot of higher-end gear. I just snagged a Sony S550 blu-ray player for less than $250 yesterday...plus they have a 60 day price match guarantee.

Mark Wattles must be doing something right because I recognize all the same employees where I bought my tv a couple years ago. Plus they actually have knowledge of the stuff they sell.

Tony M

great write-up polkatese . TM

polkatese

Not mine, Tony, cut and paste from CNNMoney.com as in the top of the post.

I actually like CC, it's like going to your neighborhood Macys of Electronics, float around and checkout the gadget trends. There is one store 5 minutes away, before there was CompUSA/GG in the same complex/area.

Airplay355

I'm really glad I didn't chose to buy a TV from there recently. Went with BB instead as their prices were the same and they had the model I wanted. The place was a ghost town and I had to wait for an employee to clock in to get a dvd played on one of the demo sets because the one floor employee was busy and the manager on the floor was talking on his cell phone. I hope something nice takes over the building they are occupying because it will sure be ugly to have an empty CC hanging around.

BlueFox

GSRBOB wrote: »

Damn i pretty much have purchased every single piece of HT equipment from CC. Its a shame to see them go. Looks like ill have to find an alternative now.

I wish they would buil a Frys here. I think costco is in the works though.

Bought from both of them, but the Internet is the way to go, and probably is a major cause of CC's failure. Some day Internet sales will start getting taxed, and the B&M stores might be able to compete.

mantis

Motzart wrote: »

The suits need to pull their heads outta their ****'s and worry about the product price and customer base.
Not their fancy condo in the Bahamas or their 4mill home(s)!!

It IS pathetic how these companies have let things spiral outta control.

.

It's exaclty right. This is exaclty how I feel. They lose there way and don't figure out how to get back. Losing your way is a terrible thing to do. No matter how much money you make over the years, if you don't stay grounded, this is exactly what happens. I watched it for years. Hoping things would change , they never do, they just get worse. Writing on the wall is something you choose to read. I wanted to clean it off.

Motzart

mantis wrote: »

It's exaclty right. This is exaclty how I feel. They lose there way and don't figure out how to get back. Losing your way is a terrible thing to do. No matter how much money you make over the years, if you don't stay grounded, this is exactly what happens. I watched it for years. Hoping things would change , they never do, they just get worse. Writing on the wall is something you choose to read. I wanted to clean it off.

Hummmmm reminds me of IBM here where I live!!

Knucklehead

polkatese wrote: »

Fall in. It's over for sure.

Circuit City to shut down
Court approves bankrupt electronics retailer's motion to liquidate and close its remaining 567 stores.
EMAIL | PRINT | SHARE | RSS
By Parija B. Kavilanz, CNNMoney.com senior writer
Last Updated: January 16, 2009: 5:50 PM ET


NEW YORK (CNNMoney.com) -- Bankrupt electronics retailer Circuit City Inc. said Friday it will close its remaining 567 U.S. stores and sell all its merchandise.

The company said it has 34,000 employees.

"We are extremely disappointed by this outcome," James Marcum, acting CEO for Circuit City, said in a statement. "We were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction in the limited timeframe available, and so this is the only possible path for our company."

In a filing with the U.S. Bankruptcy Court for the Eastern District of Virginia, which a judge approved late Friday, Circuit City - the No. 2 electronics retailer after Best Buy (BBY, Fortune 500) - said it had reached an agreement with four companies to start the liquidation process.

The company said the sale would begin Saturday and run until March 31, pending court approval.

The retailer's Web site and call center will cease to operate after Jan. 18.

Circuit City said employees will receive 60 days' notice of the termination.

Employees who are laid off earlier will get pay and benefits for the 60-day period beginning Friday, the retailer said.

Those who remain with the company to assist with the liquidation, will receive pay and benefits.

Circuit City also operates about 765 retail stores and dealer outlets in Canada. The company said its Canadian operations, which employ 3,000 workers, will continue to operate.

The company said it will redeem its gift cards through the liquidation sale, but the cards will have no value once the stores are closed.

"This is very significant. It shows you how bad things are for the retail industry," said George Whalin, president and CEO of Retail Management Consultants.

Whalin said management mistakes over the past few years combined with the recession brought down Circuit City.

"This company made massive mistakes," he said, citing a decision to get rid of sales people and other mismanagement.

What's more, given the credit market freeze, Whalin added that no manufacturer wants to sell to any retailer who doesn't have money to pay for the merchandise.

At the same time, Whalin said there's still a very slim chance that one or more firms that have expressed an interest in buying Circuit City could still buy it out of bankruptcy over the next few days.

"I wouldn't say it's completely over yet for Circuit City, but it's almost over," Whalin said.

Love Goel, CEO of Growth Ventures Group, a private equity firm focused on retailers, agreed with Whalin.

"Circuit City isn't a viable business in its old incarnation when half of electronics sales have moved online," Goel said. "CompUSA and Tweeter also didn't make it for the same reason," referring to two stores forced to close most or all of their locations.

However, Goel speculated that Circuit City could still find a lifeline if Golden Gate Capital, one of the reported lead bidders for the merchant, bought the company and restructured it primarily as an online business with very few physical stores.

"This would eliminate overhead costs, vendor conflicts and other issues," he said. "Circuit City has an almost $1 billion online business. So there is a future for it in that regard."

NPD Group's retail analyst Marshal Cohen warned that no retailer is "sacred" in this environment unless "you have a service model that differentiates you from the competition and keeps pace with changing needs of the consumer."

He said Circuit City was late to the game with its Firedog customer service business, and it didn't resonate with customers as well as Best Buy's Geek Squad was business.

What's more, Cohen said Circuit City found itself in the unfortunate position of becoming the "monkey in the middle" as Wal-Mart (WMT, Fortune 500) aggressively moved into the electronics market with its low prices model, and Best Buy continued to widen the gap with its competitors and dominate as the industry leader.

"Circuit City just got stuck in the middle for too long," said Cohen.

like i said....wal-mart....

wingnut4772

Circuit City is where I got my start with Pok and HT. They were not the best but I am sad to see them go.

Motzart

wingnut4772 wrote: »

Circuit City is where I got my start with Pok and HT. They were not the best but I am sad to see them go.

They did have some decent deals on "open box" stuff!
Had some good black friday deals too.

timmythugs

It is pretty sad to see Circuit City Being liquidated. I worked there for 10 years and I left them awhile back. They helped me out to get my mecp masters. They will be missed.

Gaara

Really? Another one? There are 3 CC threads on the front page of the clubhouse right now. Take your pick. At least it isn't as bad as Fatwallet, 13 threads on CC and counting.

http://www.polkaudio.com/forums/showthread.php?t=74223&highlight=circuit+city

http://www.polkaudio.com/forums/showthread.php?t=77223&highlight=circuit+city

http://www.polkaudio.com/forums/showthread.php?t=77205&highlight=circuit+city

timlitton

Lasareath wrote: »

The one time I found something it was mis-priced and they wouldn't give it to me. Eff Em!

I've had the same experience.

I found my psw250 on the CC website for $149.00 when it was selling for $300. I went in to my local store to pick it up and was told I couldn't have it because "that has to be part of a package deal." I told them it didn't mention a package so I had no idea why they wouldn't honor their ad. They wouldn't sell it to me!

I went to the locally owned electronics store 100 yds away and they told me they would honor the CC price because Polk has a unilateral pricing program. They gave it to me for $149.

I wrote the BBB about it and ended up getting a $150 Circuit City gift certificate as a resolution. The price was a mistake on the part of the web team, but because they had advertised it at $149, federal law mandated they honor it. They wanted me to buy it at full price and use the certificate to offset the extra cost. Since I already bought it at a competitors store, I ended up getting paid $1 PLUS the sub!

I feel bad for the people who are losing their jobs, but it wasn't hard to see coming.

timmythugs

True. They were the end to there own demise. As far as the 1st comment, circuit city is the one that made polk famous and you wonder why there are so many threads? Get with it!

cnh

CC used to be OK, had some good people, still a few around. But that firing of everyone a while back in order to lower the salaries of their employees was the kiss of death. Never really recovered, service-wise from that.

34,000 more jobs lost, whether you're a fan or a hater. That's the real story. And it's not good news regardless of where you sit on the political continuum.

This demise also signals a slow but steady decline for any and all of us who might have an interest in higher end audio. Do you think that Polk is unaffected by such closures?

I fear the big Boys are next. All the high end, to a large extent overpriced fellows--good equipment but, really, the margins are HUGE! I don't include Polk here because I do think their pricing is competitive and honest.

Yours,
cnh

timmythugs

Well spoken!

timmythugs

50-60 points of margin in audio!

danger boy

CC is probably just the first to fall... I think this is only the beginning. Some retailers could take their goods to be an online only etailer instead. Amazon is a huge e-tailer example.. and they do very well with often times pretty decent prices.

us consumers lose out because we no longer get the satisfaction of seeing an item and playing with it first before we purchase it. I can easily see more stores closing this year and taking their sale to internet only.

timmythugs

YAll of you have terrific replies. I agree with the play before pay!

timmythugs

5 years ago CC was 100% debt free. WTF happened?

polkatese

I think the tragedy is on the fact that they employs so many people nationwide, and its brand recognition that they have built over the past 60 years, regardless whether you like to shop there or not. Sorta like 7-11, Starbucks, McDonalds, etc.

If I own a private equity firm, I would buy the name and take it online only.

timmythugs

true. good point!

xj4094dg

danger boy wrote: »

CC is probably just the first to fall... I think this is only the beginning. Some retailers could take their goods to be an online only etailer instead. Amazon is a huge e-tailer example.. and they do very well with often times pretty decent prices.

us consumers lose out because we no longer get the satisfaction of seeing an item and playing with it first before we purchase it. I can easily see more stores closing this year and taking their sale to internet only.

This is an important point. I have recently purchased (on-line) 3 pairs of polks, a dvd player, an HD TV and am currently in the market for some mono block amps. I am slowly losing my fear (terror) of buying before touching/feeling/listening/looking. I must say I bought my LSi9's based solely on reviews I found online. The days of taking my favorite test discs to the local salon are numbered, sadly. The upside is the online savings are significant and if you do your homework and use forums like this you can put together a nice system.

dudeinaroom

timmythugs wrote: »

True. They were the end to there own demise. As far as the 1st comment, circuit city is the one that made polk famous and you wonder why there are so many threads? Get with it!

I thought the SDA's did that, I didn't know Circuit City was around then. CC just bought Polk to the mass market.