Circuit City May Close 150 Stores, Fire Thousands

The Wall Street Journal is reporting that beleaguered retailer Circuit City is considering a plan to close 150 stores and cut thousands of jobs in an effort to avoid bankruptcy.

One out-of-court solution the company is studying would likely lead to the closing of at least 150 stores and the elimination of thousands of jobs, said people familiar with the company’s plans. This would let the retailer liquidate about $350 million in inventory, which it could use to pay off certain real-estate costs, such as leases on abandoned sites. It would then hope to press existing landlords to renegotiate leases, many of which Circuit City regards as overpriced. Circuit City’s investors have homed in on those leases as a threat to the company’s health.

Many were negotiated when real-estate prices were booming earlier this decade. Roughly 90% of the leases don’t expire until 2014 or later, and about 80 are for vacant locations.

Circuit City’s stock has plummeted since July, when Blockbuster Inc. rescinded an offer to buy the company for at least $6 a share. In 4 p.m. New York Stock Exchange composite trading Friday, Circuit City shares closed at 39 cents, down from a 52-week high of $8.72. It hasn’t had a profitable quarter in more than a year.

The company has hired the same lawfirm that took Kmart through bankruptcy, but is trying to avoid that option because of (fairly reasonable) concerns that consumers will not trust warranties from a company that is currently bankrupt.

Circuit City Weighs Broad Cuts (subscription) [WSJ]

Comments

Edit Your Comment

  1. chumleyex says:

    Looks like my town will be losing it’s Circuit City. Hopefully they have some nice sales before they close down.

    • brainswarm says:

      @chumleyex: You must not be familiar with Circuit City “going out of business” sales. They don’t actually start discounting stuff until there’s nothing but crap left.

    • Tmoney02 says:

      @chumleyex:
      Naw If they go out of sale Gordon Brothers Retail Partners , who were responsible for the liquidation of CompUsa, Sharper Image and Tweeter will almost certiantly buy whats left or at least get hired to run the “Clearence”.

      Which means the prices will actually be ioncreased and all the good stuff shipped out before the clearance sales even begin.

      Thats why I wasnt circuit city to hang in there. Not because they offer great service but they do at least put pressure on bestbuys prices, so they do serve some purpose.

      • There's room to move as a fry cook says:

        @Tmoney02:
        Hopefully they don’t get the same company that bailed out Mervyns Dept Stores last year. The company financed the purchase by taking all real estate assets and then leasing them back to Mervyns. Mervyns had all the expenses & liabilities & no assets. Mervyns announced last week that their remaining 150 stores are closing for good.

    • kc2idf says:

      @chumleyex: Pity. The CC in my area provides far better customer service than Best Buy. Unlike BB, I can expect CC to have in stock what they advertise . . . and what BB advertises.

  2. TouchMyMonkey says:

    This is the good part – “The company has hired the same lawfirm that took Kmart through bankruptcy, but is trying to avoid that option because of (fairly reasonable) concerns that consumers will not trust warranties from a company that is currently bankrupt.”

    This means that CC isn’t making money on merchandise, but on the extended warranties they sell (and smart people refuse to buy). If the company is likely to not be around much longer, it only makes the uselessness of these extended warranties more obvious.

  3. Toof_75_75 says:

    Perhaps your town, like mine, will lose its Circuit City and be blessed with its bastard-child, “The City.”

  4. starrion says:

    I had an option to extend my warranty on my wide screen, but the CC deathwatch caused me to roundfile it. That is $350 CC won’t be getting.

  5. shepd says:

    I’ll LOL if I find the US ends up with “The Source by Circuit City“.

    • blivid316 says:

      I actually used my CC warranty thing. My 1 year old panasonic crapped out so I called, they sent out a tech from a local company (who didnt give a poop) and wrote down that it was busted despite the tv working for him. so CC issued me a 1050.00 credit which i used 5 months later to upgrade. when i bought the upgrade, i got another 2 year warranty

    • satoru says:

      @shepd: The Source by Circuit City happened when Circuit City bought out the Radio Shack brand in Canada. This brand name was actually leased to a Canadian company, Radio Shack itself did not actually run the Canadian operations. Of course once Circuit City bought out the Canadian rights, Radio Shack freaked out and voided their contract. Thus in Canada, literally overnight, all the Radio Shacks had to convert to “The Source by Circuit City”. Radio Shack is trying to make a come back in Canada though.

      • B1663R says:

        @satoru: Regardless, no one shops there. i have 3 in my town that are completely deserted. just waiting for someone to pull the plug and let them die.

  6. wellfleet says:

    I work at Best Buy, and I suppose most readers would assume that we are dancing on their graves… Not so…

    I don’t think there’s anything “just” or humorous about thousands of people losing their jobs. It’s never a good sign. The glee that Cosumerist readers sometimes show is really sad. What if your neighbour works for CC and has to foreclose on his home now, bringing your home value down? Is it funny then?

    • Canino says:

      @wellfleet: I work at Best Buy…

      You lost me after that. :)

    • Shark1998 says:

      @wellfleet: Your neighbor works at CC and his house gets foreclosed on……well then he probably should not have bought the house with an assumed subprime loan.

      If he had a marketable skill then he should have problems finding another job. Hell, even an entry level IT professional can find a job within a day or two.

      • TorrentFreak says:

        @Shark1998:

        What if you are boned by a system that doesn’t allow you to get a marketable skill? What then?

        F U, see you in the streets asking for chump change?

        • Daveinva says:

          @TorrentFreak: “What if you are boned by a system that doesn’t allow you to get a marketable skill?”

          Ummm, this is “America.” You *acquire* marketable skills in this country.

    • Corporate-Shill says:

      @wellfleet:

      Damn right we gotta keep CC. If for no other reason than to keep BB on their toes.

  7. wdnobile says:

    Good riddance. Circuit Shitty sucks. Overpriced, poorly organized, and full of “semi-honest” offers. (WOW – only 40 bucks to “install” my new USB keyboard? jerks)

    goodbye!

    • SterlingHaedjinn says:

      @wdnobile: I am a current employee at CC, and while I do agree with the fact that some of the services are totally useless, not all of them are. Would I pay $100 for a guy to come to my house and set up my wireless router? Not a chance in hell. Would those older customers who barely know how to use a computer? Quite possibly, and if they don’t want the service, they just say no.

      Best Buy has the exact same services, only they do them worse (and yes, I used to work for BB).

  8. wellfleet says:

    Less competition is NEVER good for consumers.

    • jjason82 says:

      @wellfleet: Infinitely true. On one hand I thoroughly rejoice at the possible loss of Circuit City. The one where I live, you practically have to shoot a customer in the face to get some attention. Have a question? Need to know if they have something in stock? Want somebody to try and sell you some crap you don’t need? You’re boned. I’ve literally gone into my store and, after trying to get somebody to help me for about ten minutes, stood in the middle of the store and yelled, “I HAVE MONEY IN MY HANDS THAT I WANT TO USE TO PURCHASE GOODS AT THIS STORE. IF I AM NOT HELPED BY SOMEBODY I WILL BE FORCED TO LEAVE.” The employees just laughed and went back to talking amongst themselves. I realize this is probably just my store specifically, but that’s all it takes. It’s been like this for years. For anybody that works at CC reading this post, it’s the store in Bakersfield, California.

      So I would not be sad to see them go. I would be happy. They deserve to go out of business for having such awful customer service, as well as making a living fleecing old people out of their money by charging them an arm and a leg for useless crap that any 10 year old could do. Nevertheless, one electronics chainstore means less competition. Less competition means higher prices and less accountability. If CC goes out in my town, BB will be the only electronics store left. I’ll just have to start shopping online exclusively, only going into BB to see a product in real life to make sure its what I want to buy from newegg or amazon.

  9. swissdietcoke says:

    I agree with wellfleet. except I work at Circuit City. Its a college job for me, but there are people I know that really do work their hardest, and people that really do care about their jobs. They have families to support, bills to pay.

    Don’t bash Circuit City. You can pick on them for making bad choices, and make fun of their executive team, but remember, they do still employ 40,000 people, most of which rely on it as a single source of income. It is a company made up of good people, not the rotten people this website sometimes makes them out to be.

    • Snarkysnake says:

      @swissdietcoke:

      “It is a company made up of good people, not the rotten people this website sometimes makes them out to be”

      Couldn’t let that pass…

      No, it’s not a company made up of good people,it’s a crappy company with a failed business model that is shafting what good people that there are working in it’s stores. It’s no coincidence that lots of people have the same complaints with this company – They’ve made a conscious decison to stop being screwed when they walk in the door and that pretty much means the end of CC as we know it. I hate that you or any of your co-workers might lose their jobs,but the people that you should be mad at are not the posters that have a grievance,but the assclowns that put in the policies that have wrecked this company.Why do they get a pass ? If CC tried to do everything on the up and up,they might have some semblance of customer loyalty. They made the decision that every transaction is a win/lose tug of war and now the day of reckoning is here and people like you don’t like what it will do to your good life.If you are a crackerjack employee that does the right thing by the customer,get out and work for a company that does same.

  10. Twitch says:

    Having worked for these schmucks many years ago, all I can say is that they’ve lasted longer than I thought they would.

  11. RedwoodFlyer says:

    So…this time they won’t be rehiring everyone on the condition that they work for half as much?

  12. LeahGrimlock says:

    I guess one upside to the trouble they’re having is that I had no problem finding the DVD’s I wanted this past weekend. I had shopped first at Best Buy, but thanks to their reorganization (downsizing) of the DVD department, they were out of what I wanted..

    Luckily, CC was just across the street…

  13. johnfrombrooklyn says:

    This isn’t good for Best Buy. With a crappy competitor, then Best Buy looks good. With no competitor, then people may just shift to online or smaller competitors.

    • failurate says:

      @johnfrombrooklyn: We have a CC and BB right next to each other here in SE WI. It’s your theory in action. In the past, people would go from one store to the other, comparison shopping. Now, it seems they are just skipping the CC all together.

      • drdom says:

        @failurate:

        Exactly correct. I also live in SE Wisconsin. I needed something last week that I had to have that day, and couldn’t wait for overnight delivery.
        I went to the So. 76th St. store in Greenfield. Best Buy was busy. Circuit City, directly across the street was deserted. My sympathy to the CC employees, buy your company can only screw and overcharge people for so long before they wise up and stop shopping there. Best Buy isn’t much better, but compared to Circuit City, at least here, there’s a huge difference.

      • TNAfan121 says:

        @failurate:

        Would that happen to be on 76th in milwaukee?.

        Best Buy has s*hit for CS But god prices

        CC has great service but crappy prices.

        So pick your poison

  14. Jesse says:

    The problem with the brick and mortar electronics retail model is that you have to push margins real thin to compete with the internet. Unless you are able to sell extended warranties with a high percentage of items, your labor, overhead and G&A costs make many stores unprofitable.

    Businesses failing and people losing their jobs is just a part of how capitalism works. Alhough it is sad to see that a lot of people will lose their jobs and may have trouble finding another retail job with unemployment creeping higher.

    • mac-phisto says:

      @Jesse: true, but people are willing to pay a premium for the “immediate” factor.

      i think expansion, competition & brand image are what have really killed circuit city. especially brand image. how can you compete against a company that has the “best buy” advertised on tags that we mentally associate with clearance or sale items?

      circuit city needs to differentiate if they want to succeed. they have to have that one thing that makes them better than the best to draw customers back in. but for the life of me, i have no idea what that one thing is…

      i’ll tell you what though – why not save money on liquidators & just liquidate yourself. paying a middleman to sell your shit is just silly. if they can make a profit doing it, so can you.

      • Jesse says:

        @mac-phisto:

        It’s cheaper in the long run. If a company is not good at liquidating assets, then they spend more time & money figuring out how to do it themselves vs. paying someone to handle the process.

  15. AlteredBeast (blaming the OP one article at a time.) says:

    While I agree that we should feel bad for those who may get fired, it is Circuit City that put themselves in a possition where they will have to let go their employees.

    I may feel bad for someone who spent years at Circuit City getting canned, that doesn’t mean I’m going to spend $20 for a USB cable I can buy online for $5.

    • DH405 says:

      @AlteredBeast: More like $3 if you include shipping. $0.94 before shipping. Gotta love monoprice.com

    • blackmage439 says:

      @AlteredBeast: Agreed. My sympathies go out to the few hard workers in those stores. My uncle is one of them. Before he was hired, Best Buy was courting him heavily, but I believe CC offered better pay or benefits. Looks like CC wasn’t the better option after all…

      Still, I hope CC dies a swift death. Less competition and the loss of jobs will be bad, yes, but it would be like Sears going to dust. There still is competition in the marketplace, and no one will miss what few decent products they carry in their filthy, empty, unorganized stores populated by pimply, know-nothing teens.

  16. SecureLocation says:

    There’s nothing in the damn stores anyway.

  17. KernelPanic says:

    Circuit Shitty?

    kp

  18. Ben_Q2 says:

    I do not shop at CC, its not the prices. It has to do with rebates. I see something with a price of say $100 and think ok, then find out its really $250 with a $100 rebate and a $50 rebate. Being I am the king of never getting my rebates (yes I do follow the rules). I ten to look at the out the door cost of any item I buy.

    • rickhamilton620 says:

      @Ben_Q2: same, I kinda feel like i would be shafted, having bought an item with a mail in rebate, because CC usually places the mail-in rebate text in tiny print.

      I’ve gotten my hopes up glancing at an ad, just to end up looking down and seeing 200 dollars worth of mail-in rebates.

  19. satoru says:

    Personally I think the main problem with Circuit City was the way it was laid out. Everything other than the outer perimeter stuff (TV’s and car) seemed to be laid out in a very hap hazard manner. I always found it difficult to find new release DVDs at Circuit City. Their pricing wasn’t very competitive with Best Buy either.

    • goodkitty says:

      @satoru: I agree. I used to go to CC often for no other reason than it wasn’t Best Buy (which was already right across the street). However, I think in many years I’ve maybe kept about 1 purchase out of 6. Most of the time, they don’t have prices on anything you want. If you do find a price, they don’t have what you want in stock. If they do have it in stock at a good price, it’s either a rebate or you have to spend 20 minutes finding a motivated salesdroid to ring you up “on the computer” and try to dance around his markup game. Then, if you GET your rebate and the thing doesn’t break right away, you win. But that’s rare. I’ve spent more time at CC’s return counter than the checkout counter. OTOH, despite Best Buy’s evil, I’ve never had a problem buying from them (aside from their completely dysfunctional online site).

      I’m really shocked Blockbuster wanted to buy CC. That would be like some kind of terror-spawn company. A company so apathetic you wonder how they manage to unlock the doors in the morning. Birds of a feather, maybe?

  20. jp7570 says:

    And so it begins….

    While national news will report on the closing of Circuit City stores as a sign of the economic crisis, we all know this is a situation that was completely brought on by the lousy management and customer service at CC. This company would have eventually gome away even in a good economy.

    CC deathwatch clock estimate – early 2009.

  21. Paintbait says:

    I consider CC to be the K-Mart of Electronics “Superstores”. I haven’t been in one in over a year and any time I have been in one there are fewer than five customers in the store. They’re general lack of good advertising, competitive pricing, selection and, in my opinion, a really shitty planogram made for a really bad person to person experience. Coupled with a generally rotten record for “Customer Service” I can’t say I’m surprised to hear about this.

    If your corporate office isn’t paying attention to customer service and/or outsourcing to a company in india employed by people who don’t understand american culture (and how offended most of us probably are when were speaking to a rep supposedly named “John.” Whose been fooled by that?) you’re probably not going to have many repeat customers in the electronics market (where everything tends to break eventually). Shame Shame Shame CC…

    • DanaeHaruhite says:

      @Paintbait: Absolutely. That is one of the biggest reasons we stopped shopping there. Their in-store employees were always rude, they frequently did NOT live up to rebates regardless of the fact that we jumped through all the hoops, and they outsourced their customer service to a country where nobody I called understood what the hell I was talking about.

    • TheSpatulaOfLove says:

      @Paintbait:

      Best India call center name I got was ‘Bruce’. Yeah, your name is Bruce…

  22. DePaulBlueDemon says:

    “Circuit City’s investors have homed in on those leases as a threat to the company’s health.”

    Really? I’d say that you have more problems than that, but what do I know?

  23. balilanai says:

    Serves them alright. I always thought those uniformed, poorly trained and bored employees in their store were going to face this some day. The service I got at CC was always pathetic! Good riddance.

  24. Justifan says:

    its amazing its limped along this long.
    cc’s around the bay area have had the stench of death for years now. walking around inside you could feel it was off.

  25. Bush2008 says:

    I would normally say I’m shocked at such childish behavior, but I’ve come to expect it from Consumerist comments.

    Because you’ve had a bad experience with one employee, or let’s exaggerate; and entire store of 30, you now wish 40,000 people to be unemployed? Such childish, childish behavior. But that’s what I’ve come to expect from consumerist comments. If you’re curious, the typical response by most people who actually work in customer service is: “Love consumerist, absolutely hate the idiots who comment”

    Perhaps now we know why you’ve gotten such poor service from different places; you’re self-righteous, childish people.

    • AlexandraCurvus says:

      @Bush2008: First of all, the fact that you’re a Bush supporter tells us ALL we need to know about your single digit IQ. That being said (and known) “A’ bad experience with ‘one’ employee?????” hahahahahahahahahahahahaha Yea, ok, and there’s weapons of mass destruction in my pants. Clown, do you REALLY think people WANT to hate this store??? Almost EVERY time you go into one of these pathetic stores, there’s a problem. They don’t have in stock an In-Store pickup item you were told they did, or, they DO have it, but are too lazy to go get it. They screw up your car with an installation. The clerks never heard of The Who when you’re looking for CD’s. You write to CS and get a canned response from a dothead. You CALL CS and get the same dothead. The rebate games, the lack of inventory in their stores. The employees refusing to honor policies, the employees hanging out behind the counter, while there’s a line, and not one going to actually help the customer. The list goes ON AND ON, and believe me, is NOT at just one store. Get a clue BEFORE posting, or, actually, you appear hopeless, so just step outside the trailer, and stick your head under the hood of that busted chevy on your front lawn (the one under the clothesline) and take a pipe

  26. vdragonmpc says:

    Please, doesnt anyone remember when the store was in sections? You used to be able to look at car stereo in a “unit” and it was easy to find what you wanted. Home Theater was in a glassed in room for the loud listeners. They had appliances and other useful items.

    Now its wide open and you cant hear yourself think sometimes in there. Everything is jumbled. Have you been locked at the raod install shop? I did when a friend called me about getting overcharged on her install. I had to go and explain to them what she wanted and why it was not “custom work”. On the way back the friggin doors were locked ON BOTH SIDES! Nice.

    Why did they go open air flea market? Why did they get rid of employees that could answer questions? What possessed them to stop selling appliances?

    Goodbye Circuit City my only question is if you go before Sears.

  27. Parting says:

    That what happens when you fire your best employees and sales staff. Leftovers : untrained employees could ruin anyone’s experience as a customer.

    Now I just hope that Best Buy follows. I really hate their ads ”no commission, no pressure”, which is bull@#$% !

  28. PrestonBerryworth says:

    CC is going to die because of bad executive decisions. Any good executive knows that experienced works trump new hires. That is why people get raises. When CC laid off full time employes and hired newbies this was bound to happen.

    IMHO both CC and BestBuy are the worst place to buy any electronics. I won’t get into my personal experiences, but lets say I have many. I currently would walk into a BestBuy over a CC any day of week, but they are both garbage. Nothing pisses me off more then seeing people sold things they don’t need. Every one of these places is the same though.

  29. Canino says:

    CC is the only chain store in my town that I’ve been able to walk into and see no one. No customers, no employees. No one anywhere. I started to think I had walked into the middle of a robbery and everyone was being tied up in the back. I looked around a few minutes and left, never having seen another person.

  30. ckaught78 says:

    CC has really gone down hill over the years. Best Buy isn’t that great either; just a cleaner version of CC. Why would I want to pay full price for something at CC or Best Buy when I can get it at Amazon for $100’s less with no tax or shipping costs. If I want to get a new release movie or cd, I just go to Target the week it comes out and get if for $5 less.

  31. Modred189 says:

    Here’s praying for firesales!!!

  32. adambadam says:

    I was at a Circuit City the other day in LA and I was dumbfounded at the waste of people they had sitting around doing nothing. No one helped me find what I was looking for. Then when I went to check out there was a giant line and only two registers open though there was no real designated check out area, the line was more of a blob. Then the registers were running software from the 1980s it seemed and it was slow and impractical. Took over a minute for the computer to realize that the signature pad was not working. Had to do this every time someone wanted to use a CC. Though the check out guy kept trying to make it work. Then some had to go to a different place to get the lock off my box because I was at a fake checkout stand that didn’t have the tools. Had to show my receipt to that person again, after they yelled over that we were coming. Then there were three people at the door who wanted me to show them my receipt as I left. I walked right on by.

  33. Leohat says:

    Hmm, Maybe I’m in a bad mood today but I have pretty close to zero sympathy.

    Each and every single employee is in part responsible for the crap fest that is CC. Each employee tolerated it rather than demanding their boss and their bosses boss, ad nausem, change the policies, procedures and practises that make CC so craptasic.

    If there were a mass employee revolt or strike then I might have some sympathy but their was none.

    Good bye to bad rubish!

  34. harvey_birdman_attorney_at_law says:

    Couldn’t have happened to a nicer company.

  35. endless says:

    This worked out SOOOOO well for compUSA!

  36. elc32955 says:

    Circuit City can crash & burn in a deep, dark hole for all I care. Last year they screwed me out of a $100 rebate on a Sony monitor simply because they couldn’t produce a sales receipt that was able to be clearly read & understood. The processing company for Sony rejected the rebate request, the local store would not fix the errored receipt so I could get my rebate, and their management had the old traditional “don’t bother me & get away from my counter” mentality. It would have been too difficult to go to civil court & obtain a judgement both filing fee and time-wise so I ended up letting it go. It’ll be a cathartic experience to feast off their corpse as they slide down the slippery slope into bankruptcy and dissolution…. A Pox on their house and all they represent!

  37. ZanebonoOeneus says:

    I go to Best Buy and CC only to look. I’ll never forget the CC droid who told me that the DIVX model pay per play DVD would be the dominant system, and I needed to buy it now! I told him the format wouldn’t last a year.

    As for electronics, if you are blessed to have a Fry’s in your town, you are lucky, they have it all. And, if you are really lucky, Costco will have the item you want, and they will tack on a free extra year of warrantee and take stuff back for 90 days.

    CC doesn’t stand a chance.

  38. cecilsaxon says:

    Bah- they deserve what they get. Sad thing is the employees do not. I hope there is a company gym somewhere…

    Whoever decided to squander the one resource CC had (knowledgeable commissioned sales team) deserves to be severely beaten with a left over summer noodle floaty.

  39. kairi2 says:

    This is kinda sad. Circuit City was always good to me. Ten years ago I purchased a pair of subs (no warranty) for my car, that a friend’s neighbor messed up when he tried to install them. I took them back to CC and they were replaced, not too many questions asked. I also purchased a CD player and regular speakers with a warranty, and never had any trouble having them replaced (which happened at least 4 times). They even fixed a botched amp grounding job and rewired my car for free.

    Although this was years ago, and customer service in general has gone down the garbage disposal, and the local Circuit Citys (Cities?) have turned into ghost towns, I will always have a favorable view of Circuit City from my pleasant experiences. RIP CC