Circuit City Going Belly Up

[Nickdfresh]

Circuit City to liquidate U.S. stores
Electronics retailer has struggled as the U.S. economy has weakened
BREAKING NEWS
msnbc.com news services
updated 11:42 a.m. ET, Fri., Jan. 16, 2009

Circuit City Stores Inc., the nation’s second-biggest consumer electronics retailer, reached an agreement with liquidators on Friday to sell the merchandise in its 567 U.S. stores after failing to find a buyer or a refinancing deal.

The company said in court papers it has appointed Great American Group LLC, Hudson Capital Partners LLC, SB Capital Group LLC and Tiger Capital Group LLC as liquidators. The company’s move to liquidate, first reported by CNBC Friday morning, means the retailer’s 35,000 employees will likely lose their jobs, the financial news channel said.

Calls to the Richmond, Va.-based company and the liquidators were not immediately returned to the Associated Press.

Circuit City filed for Chapter 11 bankruptcy protection in November as vendors started to restrict the flow of merchandise ahead of the busy holiday shopping season.

It had been exploring strategic alternatives since May, when it opened its books to Blockbuster Inc. The Dallas-based movie-rental chain made a takeover bid of more than $1 billion with plans to create a 9,300-store chain to sell electronic gadgets and rent movies and games. Blockbuster withdrew the bid in July because of market conditions.

Circuit City, which said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31, said in its initial filings that it planned to emerge from court protection in the first half of this year.

Under court protection, Circuit City has broken 150 leases at locations where it no longer operates stores. The company already closed 155 stores in the U.S. in November and December.

U.S. Bankruptcy Judge Kevin Huennekens had given the company permission to liquidate if a buyout was not achieved.

The retailer said Friday it does not anticipate any value will remain from the bankruptcy estate for the holders of its common equity, and added that it will provide more details soon about plans for liquidation of its stores, other assets, and the status of its Canadian operations.

The Associated Press and Reuters contributed to this report.

MSNBC (http://www.msnbc.msn.com/id/28691963/?GT1=43001)

[Va Beach VH Fan]

Looking forward to some serious sales !!

[Nickdfresh]

I wouldn't be. Those "liquidators" are a bunch of fraudulent jack-offs. There's a lot of stuff that is marked way UP before they "mark it down."

Compare prices on stuff before you buy anything "marked down 30%!"

http://gizmodo.com/5078841/how-to-buy-a-liquidation-sale-hdtv-at-circuit-city-and-not-get-screwed-hint-its-hard

[Fairwrning]

Circuit City was higher in price than Best Buy mainly..throw in Target and Wal-mart..they needed to match prices..at least in Virginia it was that way

[Nickdfresh]

I actually met with one of the original store managers from when they went national in the 1980s. Circuit City started out with commissioned sales people. There were probably a bit pushy and aggressive, but at the same time they knew their shit and earned a pretty good living selling high end components to people who were willing to drop thousands on home sound systems. He said things began to change and the downward spiral began in the early 1990s when they got rid of this and went for the hiring the minimum wage, pimply-faced high school and college kid part time. They went from selling high end stuff with a professional staff of audiophiles to a bottom line organization selling mostly crap components. Also, going national probably didn't help as these sort of chains are probably better off sticking regional.

Competing with Wal-Mart is silly because they sell junk, low end sound systems for dorms and kitchens. The real money was in components such as amps and receivers. TVs have always been low margin, as even now the price of a TV is a fraction of what it would have been in the early 60s when you adjust everything...

[twonabomber]

i checked the local CC for deals on car speakers...the "markdown" price was not too far off from what Best Buy's was.

i really never shopped at Circuit City much after the DIVX debacle.

[Steve Savicki]

Guess charging a dollar extra for media at least at Best Buy wasn't a bad business strategy after all.

[bueno bob]

I actually met with one of the original store managers from when they went national in the 1980s. Circuit City started out with commissioned sales people. There were probably a bit pushy and aggressive, but at the same time they knew their shit and earned a pretty good living selling high end components to people who were willing to drop thousands on home sound systems. He said things began to change and the downward spiral began in the early 1990s when they got rid of this and went for the hiring the minimum wage, pimply-faced high school and college kid part time. They went from selling high end stuff with a professional staff of audiophiles to a bottom line organization selling mostly crap components. Also, going national probably didn't help as these sort of chains are probably better off sticking regional.

Competing with Wal-Mart is silly because they sell junk, low end sound systems for dorms and kitchens. The real money was in components such as amps and receivers. TVs have always been low margin, as even now the price of a TV is a fraction of what it would have been in the early 60s when you adjust everything...

This is exactly what went wrong. I did a tour of duty for a while there in the mid 90's and to say the place was mismanaged would be an understatement. The fact that they beat their salespeople over the head with selling their essentially useless service protection agreements on products didn't help matters, either; I think I had to maintain a 65% sale ratio of service protection plans, if I remember correctly...if you fell beneath it, it just spiraled downwards into verbal warnings, written performance warnings and termination.

Employee morale, at least among the lower 60% of employees, was ALWAYS in the fucking toilet and just going into that place to work was a dreadful experience for a lot of people - those people being mostly the entry level high school/college kids that were trying to earn money, didn't really know shit about what they were being told to sell, and were being trained ineffectively about the product if they were being trained at all. I applied to be a CD shucker and was informed on the first day that I'd be selling A/V equipment, which I knew fuck all about.

I shit you not - I NEVER received a bit of training. Not one. I was told how to use the computer to ring up sales, but that was it, and as a result of that, I was usually forced to split the commission I made on any sale with somebody else, meaning I made dick.

Mismanagement and shoddy practices ruled that place, though. Case in point, my manager (after chewing my ass about service protection sales, since I only averaged a 45% closure of those after a while) told me to go ask the leaders how they did it (and Circuit City broadcast everybody's name and percentage level - I guess they figured embarassing you would be the proper incentive to perform more). I went to one and asked him his secret (his closure rate was 90%). VER BATIM was told this:

"When a customer is looking at a product, sell the product, casually mention the service protection at the beginning. When you get to the price, just tell him the price including the service protection, but don't TELL him that it includes the service protection plan. Just keep on selling the product, and when he's ready to buy, ring it up at the price with the service protection guarantee and ship him out the door."

THIS is what was measured as "success" among Circuit City's salespeople. I informed my boss about that, figuring that, you know, slamming would be frowned upon by the company at large. His response was "What's the problem with that?".

After having several other problems over the following week, I waited until Black Friday and no called/no showed. Let them mail me my check. In the time since, I've never purchased anything from Circuit City nor have I even stepped foot through the door. Fuck them. I'm GLAD they're gone. The unfortunate side to it is that so many employees are going to be out of work. It was an unfortunate experience; I really did want to succeed there, but when somebody binds your hands, puts a gun up to your head and tells you to go climb a mountain "or else", there's only so far you can get on legpower alone.

Honest to God, I miss Incredible Universe HARD these days...

[Nickdfresh]

If you're an audiophile who really knows his shit, you're better off working for a local chain/mom-and-pop Hifi stereo store....

The problem is that these places that become large regional chains usually sell premium stuff early on, then gradually move to close out, mid and low level junk box stuff. There was one such local chain here that was know for selling really good A/V at a pretty good price. Then they began to expand and their really good, but affordable stuff was downgraded to crappier lines at about the same prices or higher...

And when someone offers me a "service protection plan," I just stare at them.

[Seshmeister]

Ahh the protection plans are the same here.

50% commission to the salesman + the cut of shop + the cut of company arranging it means that logically only 10% or so can be going to the engineers so not a good gamble.

4 years ago I was behind some schmuck in the queue at one of these places and they sold him a 5 year protection plan on a digital camera. 'It's only $4 a week' was the selling angle. The protection plan cost more than the camera by the end of year 3 on a quickly depreciating camera.

He'll still be paying for this plan when now the camera in his fucking cell phone will be twice as good quality.

[fryingdutchman]

If you're an audiophile who really knows his shit, you're better off working for a local chain/mom-and-pop Hifi stereo store.....

Absolutely true, Nick.

I have one in my area called "Bob and Ron's Worldwide Stereo." Sounds a little hokey, but this is THE place for high-end shit from people who know what they're talking about.

Circuit City became a real shithole in the last 5 years or so. I'm not sad to see it go.