Plug Pulled on Circuit City in US … Will Shut Down and Close Remaining 567 US Stores

 

Economic Darwinism: It appears that more people will be added to the unemployment roles in 2009 as Circuit Circuit_cityCity has decided to close its doors.

Circuit City, the US’s second largest consumer electronic chain is pulling the plug and shutting its doors for good and going out of business. Circuit City had filed bankruptcy in November 2008 and hoped to emerge in a more stream-lined version of itself has sadly decided to liquidate all of its stores and assets and go out of business. U.S. Bankruptcy Judge Kevin Huennekens gave final approval to the liquidation plan Friday afternoon. The news is sad and the plight of their employees in the US is even more sad but can anyone really remember the last time the went to a Circuit City instead of Best Buy? Maybe this was just the inevitable process from not being able to deal with competition.

Most of the chain’s 34,000 store employees will be laid off. Closing sales will begin as early as Saturday and will last until the merchandise is gone or about the end of March.

Just last week, Circuit City, with 567 stores, was in talks with two potential buyers, but it was unable to reach an agreement with its creditors and lenders.

“We are extremely disappointed by this outcome,” said James A. Marcum, acting president and chief executive of Circuit City Stores. He called the liquidation “the only possible path” for the 60-year-old company.

The demise of Circuit City, while not surprising given its declining sales, is part of a radical shift taking place in retailing. Weak chains — unable to weather the freeze-up in consumer spending and choked by tight credit markets — are closing.

Booman Tribune makes a valid point that the demise of the the second largest electric retailer is not a good sign of things to come. The unemployment numbers will rise and maybe bankruptcy laws are too difficult to come back from. However, there is no bail out that would have ever helped a company that had fallen behind the times. Although in many ways companies have only them self to blame, when it came to electronic retail one thought of Best Buy and Circuit City was not even an after thought. US companies do have to compete for our dollars and should never just take for granted that just because they exist people will buy from them. There is always a new company with a new vision and a better mouse trap in the 21 century US businesses better not fall back on the motto “that is the way we have always done it” as Darwinism has never been more evident than in our present day economy.

Circuit City to liquidate remaining U.S. stores

The company’s inventory has a retail value of about $1.8 billion, said James Schaye, president and CEO of Hudson Capital Partners, the liquidator. He said sales will begin with up to 30 percent discounts and will be adjusted as the liquidation continues.

“There’s a lot of great deals,” Schaye said. “If you’re competing against someone like Best Buy, we’re going to be at a much better discount than they’re going to be.”

It was unclear what would happen to the company’s 765 retail stores and dealer outlets in Canada. Galardi told a judge there are still bids for the Canadian business.

Posted January 17, 2009 by
Business, Economy | 4 comments


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  • Comments

    4 Responses to “Plug Pulled on Circuit City in US … Will Shut Down and Close Remaining 567 US Stores”

    1. Richard on January 17th, 2009 10:08 am

      Yahoo ran a story about the possible problems awaiting those who rush to buy things at the ‘clearance sales’ that Circuit City is expected to begin running as soon as today.

      One of them is that manufacturers do not always honor warranties on ‘close-out’ sales, and that this perishing chain will offer its stuff ‘as is’ … no refunds, take it or leave it.

      Another point the article made is that just because the ads will scream, ‘lowest possible prices,’ that isn’t always the case. The old technique of raising prices covertly, then offering ‘huge discounts’ on those prices, may be employed.

      As always, caveat emptor.

      At one fell swoop, some 34,000 jobs lost. And probably those buildings will sit vacant for some time.

    2. ANewGirl on January 17th, 2009 11:07 am

      Richard is right again.

      For XMAS-we purchased an LG 42″ LCD 1080dpi Flat Screen that Circuit City had advertised for 1100. Same thing on Amazon—including shipping for $989.00 with a 1-yr. warranty through Mfg. Of course, extra $$ for extended warranty. As everyone knows—Amazon buys millions of products through thousands of distributors and some of those distributors do offer their own warranties.

      Right up until after the holidays when we in CCity to priceshop- the Salesman was claiming they were only having a re-org Chap. 11 & that they’d be around. Glad we didn’t listen.

    3. Waterboy on January 18th, 2009 7:37 am

      What happen to Comp USA? I loved their stores. There don’t appear to be any left in Texas. Did they go out of business too?

      I’ve never liked Circuit City. Why? I don’t know. I would sit in the car if my wife wanted to go there. I like Best Buy. Their warrantees (I do not know how to spell this word—close, I think) are not worth the paper they are printed on, however.

      Jerry

    4. SKeller on January 19th, 2009 10:52 am

      For all of those who are concerned about the extended warranties you purchased on products from Circuit City, actually Circuit City were not the ones who handle or handled these service issues at all. They just sell the extended warranty, as do all the other stores who sell appliances, electronics, etc., making a great profit by selling them to you by the way. They are subbing out the service portion to another company, if you read your contract, you will note this. It gives you a 800 or another toll free number, and it’s not Circuit City or any of the other stores telephone number! My Dad used to run service for General Electric many years ago, when they did service their own appliances, and he laughed about the warranties sold in the stores, because it was the store salesman’s biggest commission item, and the manufacturer’s largest profit. Go to the Circuit City web site and you can read about your extended warranty coverage purchased through them. Rest assured things haven’t changed on that front!

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