Circuit City CEO talks Bankruptcy
While Circuit City has already seen over 150 of its stores close, more closures and even liquidation may be in the company's future.
I remember the old Circuit City ads, where the giant red electrical plug would come crashing down on top of a retail building, and the motto "where service is state of the art" would come across the bottom of the screen.
Those days are gone, and all that's left is a once-prominent electronic retailer, 155 outlets weaker, and on the brink of extinction. In a letter to employees (and now, everyone), CEO Jim Marcum outlined the company's strategy for the coming weeks, which will hopefully end in Circuit City avoiding liquidation.
"This week, the company filed with the Bankruptcy Court a motion that seeks Court approval for a process that formally puts the company up for sale," said Marcum. "A sale could include as a "going concern" (meaning that the acquirer would continue to operate Circuit City as a business), pieces of the company as separate business units (such as markets, regions, or operating units) or as individual assets (such as the sale of inventory). The motion was made public today in advance of a hearing to approve the motion later today."
According to the CEO, a sale must be made by January 16th, and while Mr. Marcum believes this is indeed possible, there is no guarantee of a sale being made. In the event that no sale is made, Circuit City heads to the auction block, and will be at the mercy of the highest bidder.
While Marcum lays the company's fate at the feet of our weak economy, he does spread the blame around a little. "Poor macroeconomic conditions are further impacting our business and our vendors' confidence," said the CEO. "Some of our vendors, including some key merchandise vendors, are still unwilling to relax their strict terms and have not provided meaningful credit. Securing better vendor credit and terms is essential for Circuit City's survival."
While the future of Circuit City is cloudy, one thing is certain: come January 16th, Circuit City will be under the umbrella of some other company, be it another retailer like Best Buy or some liquidation firm who wants nothing but to sell of the inventory and then do with the name as it pleases (think CompUSA). Hopefully, Circuit City will survive, leaving consumers with something more than a two pony (Wal-Mart and Best Buy) show.
Read Marcum's letter in its entirety here.