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.
