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Circuit City: Strong Measures

October 21, 2008 | Author: Ibex Marketing

Some analysts have questioned whether or not Circuit City will survive until the end of 2009. Now there appears that the company may not finish 2008. A report in the Wall Street Journal and elsewhere yesterday indicates that Circuit City may shutter as many as 150 of its 712 stores and lay off thousands of employees in an attempt to stay afloat through the holiday shopping season. The struggling chain turned away a $1 billion buyout offer from Blockbuster earlier this year. (Blockbuster must be feeling pretty good about that outcome at this point.)

Circuit City is getting squeezed by buying clubs like Costco and by Wal-Mart, which also carry name brand flat panel TVs and other consumer electronics. The gloomy economic picture is not helping matters at all, especially now that consumers can’t use home equity loans and cheap credit cards to finance big ticket purchases like HDTVs. Even with these cuts and closures, it may not be enough to save the company.

As consumers — especially if you have a Circuit City nearby — we’ll want to monitor the closings. The company will have to liquidate its inventory in an attempt to raise cash in a hurry, and if people aren’t buying, you may well be able to get some attractive bargains before the doors close.