Posted Jan 16th 2009 1:00PM
by Brian White
Circuit City Stores Inc. (NYSE: CC) is going away for good. The nation's former second-largest consumer electronics retailer told the investing world this morning that it had not been able to reach any kind of deal with creditors or potential bidders of the company. As such, it will ask the bankruptcy judge presiding over its case to begin liquidating all of its assets as soon as possible.
This all started when former Circuit City CEO Phil Schoonover fired over 3,500 sales staffers and tried to replace them with lower-paid workers. The first time you take away your greatest asset -- those who touch customers every day -- due to cost concerns, you're ultimately doomed.
As Peter Cohan and I have discussed repeatedly in the past, the retailer's moves since then were not only questionable, but didn't even even appear to be status quo in any way. Perhaps the company's board of directors had a death wish for the company? Who knows. One thing is clear -- competitor Best Buy, inc. (NYSE: BBY) will now stand alone at the top of the consumer electronics universe, and will find its competition to be the mass discount retailers instead of its former nemesis.
If you're an investor with CC shares in your portfolio, they will soon be worthless. Not only that, the remaining 30,000 employees from Circuit City's ranks will soon join the hundreds of thousands who have been recently forced into unemployment. Current Circuit City CEO James Marcum indicated that "This is the only possible path for our company ... we are extremely disappointed by this outcome."
So, no bidders came forward (liquidators or investors), no creditors extended any terms due to the still-bleak credit market, and the once-large-and-powerful retailer is going away for good.
Sign of the times.
Circuit City will be LIQUIDATING and closing ALL of its U.S. Stores shortly....you KNOW I am gonna be on the hunt for sale circulars ALL MONTH!!!! This same thing just happened quietly with my beloved Wholesale Liquidators stores....and I missed the er...."sale boat"....lol...I'mma make sure it doesn't happen to me again!!!!
"Failure is the opportunity to begin again more intelligently."
- Moshe Arens