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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 electricalplug would come crashing down on top of a retail building, and themotto "where service is state of the art" would come across the bottomof the screen.

Those days are gone, and all that's left is a once-prominentelectronic retailer, 155 outlets weaker, and on the brink ofextinction. In a letter to employees (and now, everyone), CEO JimMarcum 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 motionthat seeks Court approval for a process that formally puts the companyup for sale," said Marcum. "A sale could include as a "going concern"(meaning that the acquirer would continue to operate Circuit City as abusiness), pieces of the company as separate business units (such asmarkets, regions, or operating units) or as individual assets (such asthe sale of inventory). The motion was made public today in advance ofa hearing to approve the motion later today."

According to the CEO, a sale must be made by January 16th, and whileMr. Marcum believes this is indeed possible, there is no guarantee of asale being made. In the event that no sale is made, Circuit City headsto 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 weakeconomy, he does spread the blame around a little. "Poor macroeconomicconditions are further impacting our business and our vendors'confidence," said the CEO. "Some of our vendors, including some keymerchandise vendors, are still unwilling to relax their strict termsand have not provided meaningful credit. Securing better vendor creditand 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 someother company, be it another retailer like Best Buy or some liquidationfirm who wants nothing but to sell of the inventory and then do withthe name as it pleases (think CompUSA). Hopefully, Circuit City willsurvive, leaving consumers with something more than a two pony(Wal-Mart and Best Buy) show.

Read Marcum's letter in its entirety here.

  • aevm
    It's not just Wal-Mart and BestBuy. I think the future will see Newegg and Amazon.com becoming leaders. I do feel sorry for circuit City employees and shareholders,but the truth is that the world has changed and it's time for the online retailers to win.

    Reply
  • wymer100
    My brother-in-law was just let go as an assistant manager from a closed store. From our conversations, Circuit City was going down the tubes even before the economy tanked. The CEO can blame the economy and suppliers, but the big problem was the horrific management of the company. The management has made mistake after mistake. The CEO and Board will no doubt be let go with their golden parachutes. It's a shame the employees have to pay the price for their incompetence.
    Reply
  • DXRick
    Am I the only idiot in America that preferred CC over BB? I can see why CC failed, due to online, Costco, Frys, and others, but I can't see why BB succeeds.

    I bought my latest DVD player at CC, my HDTV and NHT speakers at Andersons, and my receiver at Frys. My computer is built from stuff bought at NewEgg and Frys. The only thing I bought at Best Buy is the Creative 2.1 speakers. I got the APC UPS at CompUsa (no dead).

    My next computer will be built from Frys and then (if prices are much higher at Frys for some parts) NewEgg. Since I am in CA, I get to pay sales taxes at both anyway.

    BB will not be getting any business from me, just because I like Frys more.
    Reply
  • falchard
    Best Buy makes its money from appliances and people who don't know about better alternatives like Online Shopping, Direct Buy, and Fry's Electronics.
    Reply
  • zodiacfml
    amen. add to that, competition is fast getting stiffer everywhere.

    aevmIt's not just Wal-Mart and BestBuy. I think the future will see Newegg and Amazon.com becoming leaders. I do feel sorry for circuit City employees and shareholders,but the truth is that the world has changed and it's time for the online retailers to win.
    Reply
  • Pei-chen
    CC usually have better after rebate deals than BB.
    Reply
  • thomasxstewart
    Circuit City didn't keep up to date computer parts.

    Signed:PHYSICIAN THOMAS STEWART von DRASHEK M.D.
    Reply
  • frenchy
    Don't think BB isn't hurting either. They're getting ready to do another round of layoffs at their HQ. (this is after the buy out option given to employees a month ago). On a side note, BB suffers from incompetent managers as well and have made there fair share of huge financial mistakes.
    Reply
  • mdillenbeck
    I think many of these companies are failing due to the online competition. To date no business has matched Newegg's responsiveness and quality of service. With their expansion into general consumer electronics, I am sure the competition they provide is fierce.

    However, I will occasionally shop Best Buy if they have a good deal or I need something immediately. Why do I prefer Best Buy over Circuit City? Mainly because of instant rebates. Seriously, why would any company want to do a mail in rebate over discounting the price unless they are counting on being able to reject a certain percentage of claims? I've noted an increase in rejection rates on mail in rebates, so I avoid them like the plague. After all, how do you re-provide your original UPC when they claim you didn't send it in? You can't.

    Of course Circuit City is going to fail. The same events happened with K-mart and CompUSA. Stock is decreasing on their shelves, more items are marked with "special buy" tickets, and over a hundred locations have already shut down. Since Best Buy and Circuit City are in the same locations, why would Best Buy want them? Maybe to get their inventory if it is cheap enough. However, with the shrunken economy it will most likely be bought by a liquidator and sold off.

    At least we might get some real good deals in the next month. That is if you still have your job...
    Reply
  • Service is what makes the difference.

    At Best Buy the service is absolutely non-existent. I am a Tech Supervisor for Circuit City and I can honestly say I was a Best Buy shopper for the longest time out of sheer ignorance to what Circuit City had to offer. Once I started shopping with CC, I saw the error of my ways.

    Please keep in mind there are people here that may lose their jobs. Opinions aside, jobs are jobs and I am praying for something "good" to come of this. Hopefully we can keep the competition alive. What person in their right mind would compare Walmart to Best Buy as a serious technology store, come on. Best Buy will turn into the same being as Walmart with not a ton of real competition for the consumer turn to, forcing people to shop online for electronics.
    Reply