Circuit City considers shutting some stores

In order to avoid filing for bankruptcy, Circuit City is weighing its options.

According to a report in The Wall Street Journal, the troubled electronics retailer is considering a plan to close some stores and cut thousands of jobs. The Journal cites "people familiar with the matter" who say Circuit City has also hired a bankruptcy firm, as well as a consulting firm and an investment bank to negotiate emergency financing.

Instead of filing for bankruptcy, one outlined plan calls for closing 150 stores, which would free up $350 million from inventory that could be used to pay off some of the company's debt.

The retailer said that for the record it is considering several options, but won't be discussing its plans publicly.

Circuit City is the U.S.' second largest electronics retailer behind Best Buy, and has 714 stores in the U.S., and 772 in Canada.

Things have gone from bad to worse for the retailer after posting huge losses earlier this year, followed by a buyout bid from Blockbuster, which failed, and Chief Executive Philip Schoonover's departure in September.

News that the company is considering filing for bankruptcy protection comes just before the all-important late-year holiday sales rush, which is unfortunate timing. Besides a dismal economy, and having to compete with Best Buy and Wal-Mart Stores on Black Friday prices, the company also must now deal with declining consumer confidence in a chain that may not make it to next year.

[rexworld]

I know at least one store they should close, the one near Hickory Hollow Mall here in Nashville. Rude and disinterested employees, which wouldn't be so bad if you could actually find things in the store. But since you can't you always have to ask one of those rude and disinterested employees for help.

Circuit City could safely close that store without any negative impact to their bottom line. The store doesn't do well anyway because it is literally about 50 feet from a much bigger Best Buy store which gets way more traffic through the doors than the Circuit City store does.

[HlLLARY CLITON]

I think the holiday season will help them decide what to do

[eBob1]

I really don't know why one needs to have confidence that a chain will make it into next year in order to justify a purchase from that chain. Unless you are one of those people who buy those ridiculous extended service plans, I don't think it really matters. I bought a lot of stuff from Fretter and Highland before they went out of business years ago (about the same time BB and CC moved in). Some things I still have and use, others wore out, broke, or became obsolete over the years. It makes no difference that they aren't there anymore.

I used to prefer Circuit City over Best Buy because the atmosphere in their stores was a bit more refined, but in the last few years CC has become more like BB with its circus-like atmosphere.

[Bill_I]

You have not been to Fry's. What a zoo. http://www.frys.com/

[nicmart]

Circuit City is hopeless. If they shut down half of their stores, the other half will still be badly managed. It's like CompUSA deja vu. Management can't choose products well, they can't treat customers well, and they can't price products well. What's left?

[Bill_I]

Big closeout sale between black Friday and year-end.

[golowho]

Can't wait for the close out prices!!!

[golowho]

Can't wait for the close out prices!!!

[Bill_I]

Amen.

[Pointedly]

To survive, eventually Circuit City will have to concentrate on what it does best. It has good in-store warehouse operations that provide phone-in and internet customers with 20-minute pickup. In the future, that needs to be Circuit City's ONLY business. They should gut the remainder of each store, and put in multiple pick-up lanes.

[zincmann]

I called this weeks ago, after reading a lot of the dismal information on Circus City (no that was not a typo), they are the real clowns in a industry dominated by Big Box Electronic retailers having done some really bad things to their employees of past, not having a clear cut direction and building stores RIGHT across from or within vicinity of its larger rival Best Buy. This economy cannot support two of these stores selling similar or same items at the exact same prices in most cases, just open a circular from either store on any given Sunday and you will see what I mean. So as the previous poster said, get ready for some real good bargains HOPEFULLY when they close all of their stores after the holiday season.

[thenet411]

This is what happens when you have employees who don't give a crap and evil management doing evil things to customers. Good riddence to their evil ways.

[bdaughtry]

Circuit City's problems go beyond poor management and disinterested employees. If that was the problem, then Best Buy would be heading out of business too. I will always buy from Circuit City when they have the product I want just because I despise Best Buy. Those blue shirts spout out more BS, but still people line up to buy. Never underestimate the power of 'stupidity en mass'!

[Bill_I]

I have a friend who calls the chain Short Circuit City. Having a "we'll beat any price" policy means nothing because they have model numbers that are one digit different than other chains. Any fool could tell it was the same product underneath, only the foilcal is different. Beast Buy will put them outta biz quickly.

[BigGuns149]

Quite honestly I think that Circuit City waited far too long to do a major overhaul of their company. Had I been on their management team I would have looked at every store that has been open for at least a year that lost money last quarter and give them 90 days to turn around their numbers. Considering the size of CC chain there are probably at least 150 stores that are in the red for the first three quarters of this year. While I don't have access to their internal information, I wouldn't be surprised if half of their stores are in the red YTD.

At the same time I would take a major overhaul of their inventory. There are all sorts of products in their stores that I don't see as being worth carrying. Maybe they got a good price for them, but that doesn't matter if you can't sell them. For example, if I were running CC or BB for that matter I would have a plan to phase out most of their DVD sales. After the cost of labor in stocking the shelves and any credit merchant fees there is virtually no money to be made in selling DVDs. By and large selling DVDs is little more than a loss leader for the other merchandise at best. Even that I question. I would still sell Blu-ray insofar as digital downloads won't compete for a while, but digital rentals and downloads are already eroding DVD sales. By eliminating most of the DVD section they could start carrying other more profitable products.

Their computer department at CC appears to be utterly clueless. There are no netbooks, gaming computers, or higher end (ie. profitable)models at all. Going into a CC computer department is often a ghost town, which for selling computers is a bad thing. More so than anything else in the store any inventory loses value quickly. Without some type of service plan attached to the sale a lot of their computers are negative profit after overhead is taken into consideration. One area CC should consider is selling Macs. They don't have great margin, but they typically move quite a bit faster off the shelf then competing computers. I recall once asking a salesperson whether they had any Penryn based notebooks and the guy didn't even know what Penryn was! CC really needs to bring back some type of merit pay (ie. commission system) so that employees give a damn of whether what they sell stays sold and furthermore the customer is happy. Good sales associates get return business and bad sales associates get spurned by customers. Between poor selection and poor salespeople, CC should possibly consider getting out of selling computers if they can't figure out how to sell what people want.

After 90 days I would evaluate what stores to keep open and what to close. While some stores could make dramatic changes some stores are simply too close to other CC stores or are so far gone that it isn't worth the trouble to turn around the store.

Between revamping the inventory and consolidating some of their stores CC could turn around the company, but somehow I think that they will be more conservative and ultimately more stores will close.

[cyberDJ-2038765336053745013836]

They can close the store here in Columbus, OH on Sawmill Rd.
It actually sits BEHIND an HH Gregg store. How's that for bone-headedness.

[muchdrama]

Circuit City has been swirling down the toilet for years. They didn't respond when Best Buy first entered the market, and they've made stupid move after stupid move; firing long time employees who actually knew something, and hiring idiot CEO after idiot CEO.

When they DO finally crash and burn, I'll applaud their demise. Until then, I'm heading to Best Buy.

[markathome99]

Here's a good one for ya...I went to Circuit City this weekend to see if they had SATA cables. Nobody knew what a SATA cable was, even after I explained that it was for a hard drive. I continued on in the store looking myself. Then 4 guys came up, they found the manager, who was able to tell me, "No, they don't carry anything but USB and Firewire cables".
Now that's a helpful place to shop.....

[ittesi259]

This comes as no surprise to me. After the influx of Best Buy desertion to the management ranks of CC I saw this coming. As did all of my managers that cared about customers and refused to do business that way and left. As for everyone saying employees are clueless....well thats why all my friends no longer work their...all their knowledge and experience in closing sales while satisfying the customer completely all recently got fired in "cost saving" moves. Good call CC....epic fail.

The history of treating employees like crap is why I now take my business to whoever offers me the best overall deal.

[Batotahell]

BB and CC cannot hold a candle to Fry's Electronics. When I was living in Houston after Katrina, it was the only place I would go. They were what everyone else should aspire to be. The best selection of everything, and most at good prices. Now that I'm back in New Orleans I miss Fry's so much.

[jaco94]

Do you really need to bash the stores and all Circuit City employees? I mean, there are human beings working at these stores and it's difficult for us too. Just because the upper management didn't make some of the best decisions doesn't mean you need to bash the stores. If you've shopped at a bad location, it's unfortunate but that doesn't mean every store should close. Remember, you're talking about peoples jobs and source of income. I don't think you would like it if someone wished the company you worked for would close. That's just not nice and uncalled for. Don't forget who reads these forums. Circuit City employees. Now, be nice and show some consideration people.

[kuma34]

I worked for Circuit City as a Store Director, the company is in shambles. They will not spend money to fix any issues. At my store wires were falling out of the walls and we had empty shelves everywhere. This company is holding their managers accountable for direction they gave less then 6 months ago. I have also worked for Best Buy in the past. That company has a vision, a plan, and is successful because of it. Circuit City is closing their eyes swinging the bat and praying they hit something. Problem is, nobody is throwing a ball. Mike

[teddygoat]

Having experienced the "closeout" sale at CompUSA I for one have no expectations of finding good prices at any CC closing sale. With the CompUSA closing it seemed like in many cases their prices were higher than other stores like BB, Office Depot, Office Max and others. It seems that the retailer sells their inventory to a company at some discount and then the liquidation company tries to make the most money possible out of the situation.