Circuit City Files for Bankruptcy
Nov 12th, 2008 | By Christian Hill | Category: Financial NewsCircuit City (CC) made it official on Monday and filed for bankruptcy. Only a week ago, the company announced it would close 155 stores that were underperforming. On September 29, the company reported a third-quarter loss of $239 million, which was three times larger than the loss for the same quarter a year ago.
This begs the question, why would Circuit City want to emerge from bankruptcy? Best Buy is entrenched as the leader in the consumer electronics segment. Wal-Mart, which now carries name brand HD televisions at lower prices than Circuit City, is taking market share. Consumer spending on ‘luxuries’, such as big screen televisions has collapsed with the tightening credit markets.
How about the customer experience? When I recently went into a Circuit City store on a Saturday afternoon looking for an Ethernet cable, finding a sales associate was impossible. When I finally did locate one, they had no idea where to find the cable I needed. On top of that, I was one of perhaps a dozen customers in the entire store.
The cause of this poor experience is probably due to Circuit City laying-off approximately 3,400 sales associates last year and replacing them with lower paid workers. From my standpoint, and I am sure many others who have been to Circuit City lately, it is terrible shopping there. This doesn’t bode well going into the holiday season when retailers look for a boost in sales numbers.
I think perhaps it is time for Circuit City to call it a day and just cease operations. To re-emerge from bankruptcy in what is likely to be a continued economic slowdown and still facing eroding market share seems like a recipe for failure. There’s nothing wrong with knowing when to say when.
Source: Knowing When to Say When
Advertisement
They've led you to believe that investors who want outsized gains must take on ridiculous risks.
Click here to learn how a Small One-Time Investment Could Grow Until It's Larger Than All of Your Other Investments Combined.
