Circuit City Stores Inc. (NYSE: CC) is going away for good. The nation's former second-largest consumer electronics retailer told the investing world this morning that it had not been able to reach any kind of deal with creditors or potential bidders of the company. As such, it will ask the bankruptcy judge presiding over its case to begin liquidating all of its assets as soon as possible.This all started when former Circuit City CEO Phil Schoonover fired over 3,500 sales staffers and tried to replace them with lower-paid workers. The first time you take away your greatest asset -- those who touch customers every day -- due to cost concerns, you're ultimately doomed.
As Peter Cohan and I have discussed repeatedly in the past, the retailer's moves since then were not only questionable, but didn't even even appear to be status quo in any way. Perhaps the company's board of directors had a death wish for the company? Who knows. One thing is clear -- competitor Best Buy, inc. (NYSE: BBY) will now stand alone at the top of the consumer electronics universe, and will find its competition to be the mass discount retailers instead of its former nemesis.
If you're an investor with CC shares in your portfolio, they will soon be worthless. Not only that, the remaining 30,000 employees from Circuit City's ranks will soon join the hundreds of thousands who have been recently forced into unemployment. Current Circuit City CEO James Marcum indicated that "This is the only possible path for our company ... we are extremely disappointed by this outcome." So, no bidders came forward (liquidators or investors), no creditors extended any terms due to the still-bleak credit market, and the once-large-and-powerful retailer is going away for good. Sign of the times.
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Reader Comments (Page 1 of 1)
1-16-2009 @ 2:17PM
TX CHL Instructor said...
Could not have happened to a nicer bunch. Once they demonstrated their blatant age discrimination, I decided that since I was too old to work there, I was too old to shop there. Looks like other folks made similar decisions. I will not miss them.
Best Buy may be the new King of the Hill, but here locally, Fry's and (the New) CompUSA furnish adequate competition. I've personally never been all that impressed with Best Buy, and it's been a while since I set foot in one.
It's interesting how CompUSA has improved since TigerDirect bought the name (and *only* the name -- which they probably got for free for taking over the leases of a small number of the retail locations) at the liquidation fire-sale. I would not have though TigerDirect would be able to make a go of it, after CompUSA's utter contempt for their customers drove their brand into the ground. The sales force there still isn't all that knowledgeable, but they do at least seem to be motivated to do their best.
1-17-2009 @ 1:48PM
Armand Gatdula said...
Being a former employee of Circuit City, I experience first hand the doom set forth by Mr. Schoonover. It was after this I saw the volume of consumers entering the store diminish. Shortly after leaving the company, I returned as a consumer and found it very difficult to find an employee to help me that had at least some knowledge of the products or had some knowledge of proper customer service.
With club stores such as Costco and the internet selling consumer electronics at lower prices, the days of a consumer going to an actual consumer electronics store to purchase products with the help of a department specialist will soon be gone. My heart goes out to the soon to be unemployed Circuit City Associates.
1-16-2009 @ 5:35PM
Earthbound0217 said...
I really feel for those who are now unemployed. But Circuit City Got what they deserved. God Bless Frys
1-18-2009 @ 3:59PM
Kimberly said...
When they were replacing all the sales associates with low paying unknowledgeable people, what kind of deep pay cuts went to the top, to the CEOs, to the highest salaries? When will these companies learn that you don't start at the bottom when trying to cut costs, you start at the top and work your way down.
2-17-2009 @ 5:04PM
edboy04 said...
this really bites!!!!!!!!!!!! but alot of stuff will be cheaper ♣♣♣♣♣♣