Liquidators Are Bidding On Circuit City, Including Gordon Brothers
Although they are accepting offers from buyers who intend to keep the retail operation going — Bloomberg reports that Circuit City is taking bids from liquidators — including the notorious Gordon Brothers (of CompUSA fame.)
Circuit City Stores Inc.’s assets may be bought by companies that would sell off remaining merchandise and shut down the second-largest U.S. consumer-electronics chain, according to two people familiar with the planned bids.
Hilco Merchant Resources LLC, Great American Group LLC and Hudson Capital Partners are part of two separate groups of liquidators that planned to submit offers for the retailer, said the people, who declined to be identified because the auction process isn’t public.
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Gordon Brothers Retail Partners LLC and Tiger Capital LLC also are among potential buyers that would liquidate Circuit City’s assets, the people said. Liquidators buy the assets of distressed companies, which can include unsold merchandise, store displays and shelving, computer systems and other technology. Circuit City leases most of its stores.
For those of you new to the liquidation game — these companies are notorious for raising prices before discounting them.
Circuit City Said to Get Bids From Liquidator Groups (Update1) [NYT]
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Comments:
What would happen if Best Buy bought CC?
I think that would be WORSE than just having CC close their doors...
One situation creates an almost-monopoly.
The other creates a GIANT almost-monopoly.
I agree with Dooley. I'm still somewhat confused about what caused CC to completely go under, but that is a different story. Best Buy is in trouble too, so buying out CC is not an option. So what business win (long or short term) from CC either liquidating or being bought out and restructured?
I honestly think if CC fades to nothing by being liquidated, this is just further evidence that e-commerce and purchasing most/all electronic goods online is the only good way for consumers to get what they need electronic wise [from a competitive standpoint].
Just a personal theory, but that's what these comments are here for.
Eh, it doesn't matter what happens to CC.
CC could be bought by BB, but that might help keep BB afloat in this terrible economy and save lots of jobs [at BB].
Or CC could be liquidated, giving BB an edge in the market, keeping it afloat, etc..
In either case, once the economy turns around there will be a nice gap in the market for a new player.
I'd rather that than have some capital group come in and force CC to hobble along.
Liquidation story, unrelated to CC.
Champion Billiards and Bar Stools is going out of business here in Maryland. Stopped in for their 'final days' of the closing sale.
Spotted a dart board and cabinet that I liked. It was 'discounted' to $199.
They had at least a dozen that I could see in boxes sitting around the showroom. I considered making a $100 offer.
Being an avid consumerist reader, I decided to research online before making my play. I found the exact model (Arachnid LaserScoreII, including cabinet) on Amazon for $96 and free shipping.
Didn't go back. Won't give those scammers any of my money.
@Dooley: I don't see that happening becuase in many places the stores are close to each other. Why buy out a company when many of their locations are right across the street from yours? Wait for them to go out of business and you get all the benefit with none of the expense.
Bye bye CC .... NOT!
I wish they'd just die already. I don't think a turnaround is possible, at least not until the economy turns around. All indications point to that not happening anytime soon, so...
goodbye.
You'd think they could have figured out a less disruptive way to have their complaints cleared from the BBB.
I am a current Circuit City employee and a former CompUsa employee.
This process of a store being liquidated is really discouraging to the employees and consumers like yourselves. Imagine what it feels like to leave a store on Thursday night and have the store look as normal. When you return on Monday, whole displays and shelving are gone, you come back to what amounts to an abandoned town.
This is the second employer in a row for me that this has happened to. I love my job and would hope that Circuit City can make a turnaround, though I am not entirely optimistic
Those people that are happy/not caring much about the closings just imaging that you will now have 25-30,000 people out of work, and in this economy that isnt at all promising for us.
I have heard rumors of Wal-Mart looking at them as well, but this is probably less likely than a liquidator. If this happens and Wal-Mart runs the stores as is (with lower prices), Best Buy will be toast.
Their CEO was named one of the "10 Worst managers of the year" for his stunt that killed sales : Firing all the experienced sales people because they made too muchmoney.Real smart move.
@Snarkysnake: Not to worry--that CEO will be WELL compensated if/when the company goes under. Can't have him needing to rub elbows with the "common people", now can we?
I guess a business model consisting entirely of "screw the customer as hard as you can all the time" just doesn't work in the long term.
I actually worked for both Best Buy and Circuit City for over 10 years combined. I could see that CCity was a sinking ship and got out of retail all together. In all honestly I believe that retail electronics will eventually die off. You can purchase everything online cheaper because online store do not have the overhead of a click-and-mortar business. The thing where people will be kicking themselves in the ass over is when this does happen and large retail stores completey shut down you will not be able to see that new tv, camera, whatever before you make a purchase. The way it works now, is the customer goes into the store and physically looks at the product, goes online to find a better price and buys it online to save a few hundred bucks. When the customer is unable to see the product before they purchase, they will become extremely hesitent to buy. What will be interesting to see is how the electronics market will be when Best Buy closes down.....
Bring back The Wiz!!
Nobody beat them.
I hope circuit city has real lawyers, and not just some 19 year old they're paying $8.00/hr.
@mbz32190: I worked at Albertson's in college when they bought the stores, but it was unclear which were Cerberus. I think the area I was in was Supervalu. I can't remember. Did Cerberus butcher those stores they got?
@downwithmonstercable: Some economists believe that the store closings are necessary to re-establish a "normal" retail equilibrium. For years now, we've just been buying too much shit - clearly more shit than we can afford. This lead business to build too much retail space, and in the long run it is healthier for the economy for these stores to close and re-equilibrate with demand. Of course, the immediate loss of jobs and competition will certainly be bad in the short run.
@Canino: Best Buy is pretty much a monopoly in Canada. The only other large store is Future Shop, which Best Buy bought out in 2001 when they first came into the Canadian market. They have stores which are pretty much across the street from each other. Actually, they just opened a new Future Shop flagship store here in Edmonton (the biggest Future Shop in Canada), just 3 blocks away from where they built their first Best Buy in 2001. Both stores are open, and both are busy!
@ludwigk: This will also apply to our population as well, as we currently have a huge surplus of people in the country. As more and more businesses close and jobless people starve to death, the population will adjust itself back to "normal" levels. ;-)
So... What will the liquidator's do with all of the stuff? Will there be any deals? (real ones this time)
@NerissaHapkido: I think you're underestimating the number of people unwilling to even try buying things online (and not just elderly people, either). I work at Best Buy now, and I regularly find myself suggesting that customers check online for XYZ product that we don't have (usually cell phone batteries and cases), and probably half react with shock and horror at the very idea of buying something over the internet. Either they "don't know how," are afraid of putting their credit card information online or "don't want to wait."
Instant gratification is a powerful thing- the cell phone industry bases the entire concept of upgrade prices around it, after all. I think that people who visit this site love the idea of retail dying out completely in favor of the internets, but the very fact that we're on this site indicates that most of us are reasonably computer savvy. Crazy as it seems, there are still a lot of people for whom that's not the case, and they're not likely to suddenly start doing all of their shopping online.
I just wanted to point out that Best Buy is not in trouble. The company was less profitable than investors were hoping for in their 3rd quarter results, but it was profitable none the less. Circuit City lost money for nearly 2 complete years before filing for bankruptcy in November.
@maciejb: Yes this sort of fake competition has its form in America in the form of GameStop and EB Games, both the same company quite often in the same mall, subtly different pricing, and stock. Just to make people feel good that they "shopped around".
@downwithmonstercable: My husband, an ex CC employee, jokingly came up with an idea for the company: have Microsoft buy it and opening up Microsoft stores to compete with Apple stores. They could release new software, products (Zune Phone anyone? No? Dust?) exclusively in those stores first and offer repairs honoring most major manufacturer warranties.
"Circuit City can't go out of business!
THEN WHO WILL STOP THE TERRORISTS? "
Radio Shack... that is why they want my full name, address and phone number to sell me a 9 volt battery?
What? No gov't bailout?
What about the thousands of people that will be without jobs? The ripple effect? Global warming? WHY ARE MY SOCKS NOT DRY YET?!?
I work for Firedog and Circuit City has been a great company to work for. I have a family to support and I am very saddened to think people are happy to see thousands of people like myself out of work. SHAME ON YOU. Do you think it is good for our country for more people to be unemployed???
@JGKojak: Hey, that's nothing! When I tried to write a check, they took my first born son as collateral until it cleared!
@Ryan Fisher: In all honesty, yes. Yes, it is good for our country if businesses with poor management, flawed business models, and the inability to adapt to changes in the marketplace go under.
It's horrendous for workers, particularly in the short term. Don't get me wrong: it's hell to be laid off because your employer's downsized or gone under. I'm sorry you're in the middle of this. But it is good for the economy in the long run.
For the country, the markets, or any other biosphere-like system to thrive, the weak and sick members must die off. Poorly performing companies must go under so that innovative new companies have the opportunity to wriggle their way into niches and vacuums left unoccupied (creating new jobs in the process). The net effect is an eventual advantage to the country--even though that's cold comfort for those who suffer in the meantime.
Unfortunately, the incredible growth of the economy in the recent past had the effect of artificially buoying up many companies, delaying their demise. Instead of a steady-but-low rate of failure, we're now seeing all these lame-duck businesses crashing at once. The resultant recession isn't pretty, but it's part of the market's cyclical nature.
This is truly a shame and the fault of the company's management and a horrid President who rose to fame by firing all the most experienced employees a couple of years ago because they claimed they made too much money! The massive negative PR they got from that was made worse with mis-step after mis-step since. They seem to have no idea how to run a retailer and I was amazed to see the same guy who has shot himself in the foot 10 times is still running the place! Someone CAN turn around CC if they clean house up top, but will they step forward and bid?
I'm not sure what the big fuss is about CC or BB going out of existence. I haven't bought anything from either company in years. The only times I visited were to compare products before I bought them online at a lower price.
@FaustianSlip: We're probably not looking at the end of retail electronics, just the end of retail big box electronics. Imagine Amazon opening a Brick and Mortar electronics store. Very small, only the very best selling items, and no or very limited stock, very few employees. Overhead would be low, people could window shop, compare and then order through their own amazon account (free in-store pickup, of course) or pay a premium to take home one out of the store's stock.
You could practically have your Amazon-branded LCD TV store in a mall kiosk.
I'm also going to predict that the mom and pop stores that survived the big box era probably will thrive by continuing to provide first class customer service for the people who really won't/can't shop online.
They are going under because of corporate leadership going back ten years til now.. All corporate staff care about is HOW MUCH they made.. Their decisions killed the company...
Getting rid of experience staff to bring in high school kids.
Lying to their shareholders about profits.
Getting rid of appliances to save on shipping costs?? Even though the trucks were going there anyway?? And appliances are a huge profitable merchandise in markup.
Their customer service and warranty companies would flat out lie or try to screw the customer at Circuit City corporates will.
And lets talk about Wii's, Circuit City usually sits on 40,000 of them at all times and only releases them in small quantities..
CC was one of the most corrupt companies I have ever worked for. It was never about the assoicates or the customers, it has always been about corporate officers..
Actually that CEO was fired..
The new CEO they brought in is the one that sank Ultimate Electronics and one other company into the ground so it could go private and then make a profit for himself.
Yes it is, it sucks to lose your job. It happened to me, I worked and managed at CC for 10 years.
No one at my store did anything wrong, the KC market was killed off, why? Because most of us refused to lie to customers like the Circuit City way??
You are firedog, do you think it is necessary to charge 40+ dollars to do updates for the customer or 40 dollars to put in memory??
The company is corrupt and deserves to die.
I've done the same thing, and sadly, I would have payed slightly more to have the instant gratitude or to avoid shipping charges (which I consider in final price), but both CC & BB were many times way out of line on their pricing to the point that I had to ask: "WTF were you thinking when you priced this?"
Will current CC employees give unbelievable deals now if surreptitiously asked?
Hmmm ... just thinking out loud ... but how nice it would be if Newegg bought CC. Finally, we could possibly have an electronics retailer with some class and decent prices. Maybe then I'd find reason to step into an electronics retailer's store.
newegg was egghead B&M. Didnt work and they successfully transitioned to online only. Why would they want to go back to something that didnt work?
@Ryan Fisher: I work for CC too and it has been rough the past couple of weeks. The truth is, consumers care only of themselves...that's why they treat us like crap half the time. The true story is, if we liquidate thousands upon thousands will be out of jobs. It is very sad.
I really hope someone can step up and turn CC around. Stores closing, now matter how much people hate them, is not a good thing. Cerberus should buy them out and restructure. They've done a lot of good things with companies they've bought.