Monday, October 20, 2008
Circuit City May Close 150 Stores Due to Slow Sales
You may remember Circuit City's old motto: "Where service is state of the art".
Judging from the rumors that Circuit City will be closing up to 150 stores, the state of the art service wasn't impressive enough to survive against rival competitors such as Best Buy, Wal-Mart , H.H. Gregg and online stores such as Amazon.
Only six months ago, Circuit City's stock sold for $5.75 per-share, and as of 2:00 p.m. today, it was at 39 cents per share, compared to Best Buy at $25.00. How did it fall so fast for the former giant of electronics retailers? In my opinion, there was a tri-fecta of damaging factors.
- Recent changes in leadership
- Best Buys' foresight to capitalize on mobile media market
- Failure to converge with other media
CEO James A. Marcum was left holding the bag when Former CEO Phillip Schoonover stepped down. Marcum inherited a mess that included two-straight years of slumping sales and a questionable foundation after Blockbusters' Billion-dollar buyout offer was refused. Meanwhile, Best Buy was making bold moves, including an alliance with Apple to sell the iPhone.
According to Marketwatch.com, Circuit City hasn't confirmed their plans to close the 150 stores, but , they're developing a turnaround plan with FTI Consulting, Inc and they've have hired Skadden, Arps, Slate, Meagher & Flom LLP which oversaw Kmart's Chapter 11 reorganization. Spokesman Jim Babb wouldn't offer any further details when he replied to Marketwatch.
*Update Nov. 10
Wall Street Journal reports :Troubled electronics retailer Circuit City Stores Inc. filed for Chapter 11 bankruptcy Monday in an effort to stay ahead of lenders owed $898 million.
By Matt O'Hern at 02:19 PM | Comments (3)