Circuit City acknowledged that there is indeed an elephant in the room today, declaring Chapter 11 bankruptcy in an attempt to seek protection from creditors while it tries to create a reorganization plan to save the company. The problem is that it owes millions of dollars to the very companies that it needs to provide inventory for the upcoming holiday sales season. Given the dreadful sales figures for October, it looks like a lean shopping season for all, and it will be difficult for Circuit City to get into the black over the next 8 weeks. Slow sales will mean that retailers will slash margins just to get buyers into the stores, so there may not be much profit left in those transactions.
Now that Tweeter is knocked out and Circuit City is hanging on the ropes, expect to see other consumer electronics retailers close up their tents. The sales have been moving down steadily from the specialty retailers to the electronics stores, then to the buying clubs, and finally to Wal-Mart with its line of top-brand flat panel TVs.
If you’ve got the cash (or available credit) and the willingness to spend it on an HDTV or other consumer electronics product, you’ll be in a position to get a great deal this season.