Circuit City to shut down remaining stores
After declaring bankruptcy and seeking a possible sale, the nation's No. 2 electronics retailer is forced to close its doors.
After exploring other options, Circuit City said Friday it will begin liquidating all remaining stores.
About 30,000 employees face layoffs as the rest of its 567 stores are closed. The fates of outstanding warranties, its Firedog repair service, and Canadian stores are still to be determined, according to the company.
The nation's second-largest consumer electronics retailer filed for bankruptcy in November and initially closed 155 retail outlets in an attempt to get its roughly $2 billion debt under control. Just a week ago, Circuity City announced it waswith two "highly interested" parties. After the talks broke down, the company said, it had no choice but to all remaining merchandise and shut its doors.
"We are extremely disappointed by this outcome. The company had been in continuous negotiations regarding a going concern transaction. Regrettably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction in the limited timeframe available, and so this is the only possible path for our company," James Marcum, acting president and chief executive officer for Circuit City, said in a statement.
The disappointing, recession-weakened holiday season likely sealed the retailer's fate, although thebefore the economic downturn. The retailer had posted several huge losses late 2007 and early 2008, but the rash of bank failures in September and October proved disastrous for it.
The resulting global credit crunch hit Circuit City hard. The retailer buys TVs, stereos, laptops, and other gadgets on credit, usually at a good rate from vendors with the promise to pay them back once the company sells the goods in its stores. But as the company racked up huge losses, and credit became suddenly more expensive, vendors stopped giving Circuit City reasonable financing rates.