IamLegend

Time to start reporting on area stores and their sales prices. Too bad they are closing but writing was on the wall.


Circuit City to shut down
Court filing shows bankrupt electronics retailer seeks approval to sell merchandise in its remaining 567 stores.
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See all CNNMoney.com RSS FEEDS (close) By Parija B. Kavilanz, CNNMoney.com senior writer
Last Updated: January 16, 2009: 1:31 PM ET

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NEW YORK (CNNMoney.com) -- Bankrupt electronics retailer Circuit City Inc. said Friday it has asked for court approval to 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, 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 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, an investment banking 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."

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."

First Published: January 16, 2009: 11:16 AM ET

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IamLegend

More info
Go to Google NewsCircuit City to liquidate remaining US stores
By MICHAEL FELBERBAUM and VINNEE TONG – 1 hour ago

Bankrupt Circuit City Stores Inc., the nation's second-biggest consumer electronics retailer, said Friday it failed to find a buyer and will liquidate its 567 U.S. stores. The closures could send another 30,000 people into the ranks of the unemployed.

"This is the only possible path for our company," James A. Marcum, acting chief executive, said in a statement. "We are extremely disappointed by this outcome."

The company had been seeking a buyer or a deal to refinance its debt, but the hobbled credit market and consumer worries proved insurmountable.

The liquidation of Circuit City is the latest fallout from the worst holiday shopping season in four decases. People have slashed their spending since the financial meltdown in September as they worry about their job security and declining retirement funds.

Other recent casualties include KB Toys, which filed for bankruptcy in December and is liquidating stores. Department store chains Goody's Family Clothing and Gottschalks Inc. both filed for bankruptcy this week — Goody's plans to liquidate, while Gottschalks hopes to reorganize.

Industry experts expect more bad news in the coming months as spending likely will deteriorate further.

Circuit City said in court papers it has appointed Great American Group LLC, Hudson Capital Partners LLC, SB Capital Group LLC and Tiger Capital Group LLC as liquidators.

"Regrettably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders," Marcum said.

Shareholders are likely to receive nothing, as is typical in bankruptcy cases. It was unclear what would happen to the company's 765 retail stores and dealer outlets in Canada.

"Very, very sad," said Alan L. Wurtzel, the son of company founder Samuel S. Wurtzel, and the chief executive from 1972 to 1986, board chairman from 1986 to 1994 and vice chairman until 2001. "I feel particularly badly for the people are employed or until recently were employed."

Wurtzel has previously said Circuit City didn't take the threat of rival Best Buy Co. seriously enough and, at some points, were too focused on making a profit in the short term instead of building long-term value.

Circuit City filed for Chapter 11 bankruptcy protection in November as vendors started to restrict the flow of merchandise ahead of the busy holiday shopping season.

It had been exploring strategic alternatives since May, when it opened its books to Blockbuster Inc. The Dallas-based movie-rental chain made a takeover bid of more than $1 billion with plans to create a 9,300-store chain to sell electronic gadgets and rent movies and games. Blockbuster withdrew the bid in July because of market conditions.

Circuit City, which said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31, said in its initial filings that it planned to emerge from court protection in the first half of this year.

Under court protection, Circuit City has broken 150 leases at locations where it no longer operates stores. The company already closed 155 stores in the U.S. in November and December.

U.S. Bankruptcy Judge Kevin Huennekens had given the company permission to liquidate if a buyout was not achieved. The company still needs final approval of a liquidation from the court.

The liquidation is the latest big blow to the nation's malls, which have suffered from a rise in vacancies as a slew of chains from Mervyns LLC to Linens 'N Things have liquidated. But analysts say that the demise of Circuit City, whose stores range in size from 20,000 to 25,000 square feet, will hurt the fortunes of mall operators even more.

"It will bring to market a glut of big box spaces across the country," said John Bemis, head of Jones Lang LaSalle Inc.'s retail leasing team. "It will have one of the largest impacts on big box real estate across the country."

Rob052067

If anyone has any CC gift cards, you better get in to one of the remaining stores today (but not any that already started shutting down back in November). I just ran over to the nearby CC and they were still accepting gift cards today (used my last one). Nobody seems to know if they'll be worthless tomorrow, or not. Also, current ad-sale prices may also no longer apply once the liquidation sale starts.

I found a couple awesome deals today. Christmas dvd's and cd's at my local store are 75%-off (YMMV). I picked up 'Shrek The Halls' at $3.75 and 'Christmas Classics Favorites' at $7.50. I also picked up a Western Digital MyBook 500GB USB HD for $89.99 sale price.

NiCK Crush

So, are those "The City" stores going to start popping up then?

DonTHX1378

Very sad because the last time I was in there 3 of the people that had worked at Best Buy for years jumped ship to City when they had openings. This was only last month that I was in there and I talked to one of them and they had all just started 4 months earlyer. They were hoping that someone was going to buy them out and keep City open, but I knew back then that it was only a matter of time til City was done for. Anyone know what the sales are going to be like? Or do we have to wait for tomorrow to find out.

PopcornBandit

I'm sad to see them go. My local CC is (was) great. There is (was) always someone around to help you, and the staff is (was) very friendly. It is (was) an all-around friendly environment.

marty888

NYC's newest Circuit City has only been open less than a year, after extensive remodelling of a space that was - are your ready? - Tower Records.

basaro

This was expected, but it still sucks. CC did blow around here, but it is never good to have less competition. Now I can't PM them at BB anymore, etc. I hope another retailer (new or old) comes in soon to even things out a little. We could use a Fry's here.

The newest store (brandy new building) here in Amherst/Nashua has been opened for like 6 months, all done now.

Rob052067

Another 30,000 jobs lost.

And, with the loss of it's main competitor, we can expect price increases at Best Buy.

DVD Josh

The article says explicitly that gift cards will be honored through the liquidation.

Rob052067

Thanks. I was looking for that sort of info, and totally missed it! The folks I talked to at the store didn't seem to know.

Mazje

So if I have something with a protection plan from Circuit City, what should I do?

Snowmaker

Pray nothing goes wrong with it.

IamLegend

I was thinking same thing...used to be Comp USA, Circuit City and Best Buy with nice sale ads on the weekend...I routinely price match things and get better price-usually at Best Buy.

izatright

If Best Buy starts jacking up prices, or fails to deliver on occasional sales, I'm taking my business online or to FYE / Suncoast.

mnementh

Well, that's a line I won't have to stand in on Black Friday and fewer store exclusives to buy.

SPRBD

I would not count on it.

ramivic

From the AP wire -

Bankruptcy judge approves Circuit City plan to go out of business, liquidate 567 US stores
By MICHAEL FELBERBAUM and VINNEE TONG | AP Business Writers
1:48 PM CST, January 16, 2009
NEW YORK (AP) — A bankruptcy judge says Circuit City Stores Inc. can liquidate its remaining 567 U.S. stores.

Circuit City needed approval from U.S. Bankruptcy Judge Kevin Huennekens (HIN-a-kins) to begin to put itself out of business. It sought a buyout deal, but one could not be reached.

The nation's second-biggest consumer electronics retailer says it will lay off more than 30,000 workers and begin close-out sales on Saturday.

Richmond, Va.-based Circuit City filed for Chapter 11 protection in November.



Its Canadian unit is still negotiating for a possible takeover.

The Monkees

Wow tomorrow? So fast? Sweet! I just got paid too!

pridesticks06

While I was never a huge fan of CC, I'm not too happy about the lack of competition with BB now. Only one FYE within about 100 miles of 3 Best Buys. Not good.

Ravenous

Wait, so theyre closing ALL their locations?

Damn, I got a friend who works at the one I go to and its always been a good place that had better CS than BB. Everyone there was nice.

What about price matching, will they still do that?

conehead433

So I just visited their website to see if I could find a deal on some HD DVDs. All the decent titles were priced at $19.99 or higher. What a bunch of idiots.

Sweet Baby James

Two predictions-

1. They will start at only 10% off.

2. The store will be packed tomorrow.

darkside

Never had many good experiences there and it got worse when they laid off all their veteran employees and stuck with the lowest paid guys they could get. I'm sure congress will bail them out if they ask.

Ravenous

Which location would you go to? Id hit up Ingram