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More bad news for Circuit City (NASDAQ: CC). After the resignation of its CEO followed by disappointing quarterly results and the company's decision to withdraw its guidance, the company has hired turnaround specialist FTI Consulting Inc. as an adviser on restructuring. Stifel Nicolaus & Co. analyst David Schick wrote that "The risks of bankruptcy are very real [...] Vendors will have to decide how they plan to do business at Circuit City.''Reports of a company hiring a restructuring specialist are almost never good for shareholders, but it may be a sign that Circuit City is finally being realistic about just how dire its situation is. To date, the company has explored a bizarre strategy of opening new stores in the face of devastating sales declines as it loses traffic to better competitors like Best Buy (NASDAQ: BBY) and Wal-Mart (NYSE: WMT).
But it may be too late, as the company's piles of red ink and bloated balance sheet give Circuit City very little flexibility, especially given the current state of the credit markets. Given the company's recent announcement that it was wrapping up its unsuccessful effort to explore a sale, it's hard to see any good catalyst on the horizon.
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Reader Comments (Page 3 of 3)
10-09-2008 @ 2:57PM
Clay Brewster said...
There's only one Circuit City. All else is a cheap imitation.
10-09-2008 @ 6:42AM
GORDONDAVISD said...
FINALLY WHAT COMES AROUND, GOES AROUND. IT TOOK TIME BUT IT WILL HAPPEN SOON.
ALL THOSE THAT CC HAS SCREW IN THE PAST BY BLACK BALLING THEM ETC WILL FINALLY GET THEIRS.
IF THE STOCK HOLDERS ARE SMART THEY WILL BRING CHARGES AGAINST ALL PAST CO EXEC. FROM THE PAST 10/15 YEARS WHO BLEED THE CO DRY.
THEY DESTROYED ALOT OF LIFES.
HOPE THEY ALL STRUGGLE LIKE WE ARE
10-09-2008 @ 1:30PM
lalandlord2 said...
I remember, a few years back my 90 year old aunt bought a VCR from them and they pushed their great expensive extended warranty on her. The deal was, they were to just simply replace the unit if it goes bad. Well, it did go bad and when she went to get help they did not want to help her. I went back with her and had to yell and make a scene by threatening legal action. they finally gave in. Once a dud, always a dud. I had gone back later to make other purchases though which went O.K. I don't hold lifetime grudges.
10-11-2008 @ 3:20PM
Rob Staudt said...
I worked there for 10 years and they let me go with a sorry severance pkg.,and a promise I could come back in 10 weeks tail between my legs and take less pay. I was one of the best in the only Vermont store and was escorted out like a criminal and why?? For doing a good job,that they now have high school kids doing very poorly at,with no customer service skills. I lost my health insurance 3 days later and I have a family of 5 to take care of. I monitor their status daily to this day to see them go under. I knew this was coming when they laid me off. Their former CEO should pay me for my troubles,and the hefty health bills I ended up with in the subsuquent weeks after the counterprodutive layoff. I pray for the day their doors close for good.