Circuit City files Chapter 11

Circuit City files Chapter 11

Summary: Circuit City said Monday that it has filed for Chapter 11 bankruptcy and that the company plans to operate its business without interruption.Circuit City, the second largest electronics retailer behind Best Buy, has been thumped by its bigger rival and stores such as Wal-Mart.

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TOPICS: Banking
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Circuit City said Monday that it has filed for Chapter 11 bankruptcy and that the company plans to operate its business without interruption.

cc.pngCircuit City, the second largest electronics retailer behind Best Buy, has been thumped by its bigger rival and stores such as Wal-Mart. The company said it has lined up $1.1 billion in debtor-in-possession financing so it can pay employees and keep the business running.

Meanwhile, the company said that vendors were cutting it off over liquidity concerns. In a statement (Techmeme), Circuit City, which is closing 155 stores, said:

Circuit City recently announced that it was taking certain actions to address the company's financial condition and deteriorating liquidity position. Despite aggressive efforts to secure vendor support, vendor concerns about the company's liquidity and ability to pay for its purchases in this difficult economic climate have escalated considerably since the company provided a liquidity update on November 3, 2008, further impairing the company's ability to conduct business and provide service to its customers. Faced with the need to secure ongoing vendor support and to ensure adequate merchandise flow to stores during the important holiday season, the company has determined that it would be in the best interest of its stakeholders to file for reorganization relief under Chapter 11.

In Chapter 11, Circuit City will continue its reorganization, ditch leases and ultimately wind up with a chain of about 566 stores. Given the Circuit City move you can expect Best Buy to gain more share in the brick-and-mortar world.

A look at the 3-year chart:

ccchart.png

And in the "some of the best move are the ones you don't make department," there's a collective sigh of relief from Blockbuster. Just a few months ago, the movie rental chain wanted to buy Circuit City, but came to its senses.

Topic: Banking

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12 comments
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  • Consolidation

    Circuit City's reduction decreases the number of stores in which to purchase electronics in many areas.

    There are now three super banks in the US after the mergers and bankruptcies.

    Most industries go through a period of consolidation when they mature. Software is a good example. But is it possible that even after consolidation economic crises will force a further reduction in the number of sellers of good or services?

    Does capitalism tend toward oligopoly at best and monopoly at worst?
    Anton Philidor
    • Consolidation

      Capitalism tends toward Fascism without regulation.

      But in this case the internet is the biggest
      competitor to all of the retail outlets. Circuit city will
      hardly be missed. Circuit City business practices
      made it the weakest remaining national electronics
      retailer and the first to fall.
      gertruded
      • Fascism??

        Fascism is a totalitarian nationalist ideology that advocates itself as being a third position alternative to both capitalism and communism.
        Fascists wish to solve existing economic, political, and social problems by achieving a millenarian national rebirth by exalting the nation or race as well as promoting cults of unity, strength and purity.
        GoPower
  • Price - Service - Selection: take your pick

    This is no surprise, really. Circuit City doesn't stand out from its rivals in any of these areas, at least in our area. You need to bring something to the table in at least one of these areas over your rivals in order to make people compelled to visit and purchase.
    ejhonda
  • RE: Circuit City files Chapter 11

    Not surprising since its brick and mortar stores offered few incentives. I attempted to shop there many times but received no assistance, even from the "supervisor". Might as well as shop at home if you don;t have the friendly knowelable staff.
    sheepie99
  • RE: Circuit City files Chapter 11

    I first read about CircuitCity's situation this morning at <a href="http:/www.uberi.com">http:/www.uberi.com</a>. It's a deal site that I go to frequently to find some bargains that cannot be located elsewhere.

    In any case, Uberi.com warned about CircuitCity's closeout sales having items that are priced higher than its website. It also warns about risking any CircuitCity rebates. Just thought I should share that.
    john4857
    • Good point on the rebates!

      :)
      Been_Done_Before
  • Wow, did I miss that one!

    In 2007 I forecast that CC would file Chapter 11 in the third quarter of 2009. I then revised it to first quarter of 2009. I thought I would see them closing so many stores before filing, but here we are.

    What the hell is wrong with this company? They used to be at the top of the food chain and now they are looking for the crumbs they dropped.

    I wonder what Radio Shack will do next.
    majoritywhip
    • Circuit City files Chapter 11

      Circuit City is alot like the big 3 Automakers. They are responsible for their own demise. Almost everything in the stores is overpriced and good luck trying to find any salespeople. And when you do find them, they are usally hanging out in a group near the big screen tvs. With Best Buy and Wal-Mart, there are actually things on sale and for a good value price-wise. Granted, neither Best Buy nor Wal-Mart are leaders in customer service, but at least they make an effort. Circuit City hasn't grasped the concept yet and seeing as how the company is going down the toilet, i don't think they ever will.
      tampabayjon
  • Goodbye and so long, we hardly knew ye...

    A few years ago I remember that CC fell on hard times and they closed 4-5 stores in Indianapolis, leaving just one on the far northeast side. I never was impressed with the store, selection, customer service, or prices.

    Where I am at now, we have no good choices for computer components or electronic parts. Radio Shack, maybe, but they've always been overpriced compared to their competition and have moved away from the quality electronics store that they once were.

    I was sorry to see CompUSA close up all there stores here in Nashville, TN area, not because of the customer service, but just because of their selection being better. Now I just have to find a good local merchant and take my business to him or shop online.
    dinosaur_z
  • Circuit City website "Updating our site"

    It's the middle of the day Sunday and I've been trying for hours to access Circuit City's website and keep getting only the 'updating our site' message. Is this just an ordinary Internet glitch...or has their website in some way become a casualty of their economic problems?
    cpierson9
  • RE: Circuit City files Chapter 11

    Their business model/strategy didn't exist whatsover. I don't know if any of you guys/gals signed up for their weekly ads. I hate it when the stuff they listed in there say "Get up to 20% off on x,y,z...., get up to $20 off on a,b,c, get up to...blah, blah, blah." What the the hell is wrong with that. Why couldn't they just put in the exact $$ amount for people to see. It's so annoying with that strategy. No wonder they went belly up.
    JadeBlade