Lights Off: Circuit City 1949 – 20099 Mar, 2009 By: Erik Gruenwedel
Bankrupt Circuit City Stores March 9 officially closed the doors on 567 retail locations after 60 years of business.
The Richmond, Va.-based No. 2 consumer electronics retailer, which ceased operations Jan. 16, has been under the direction of liquidators seeking to sell $1.7 billion worth of product, including more than $50 million in DVDs.
In total Circuit City owes more than $650 million to its biggest unsecured creditors, which include CE manufacturers and Hollywood studios. Banks and lending organizations will be the first to recoup what will likely be pennies on their loan dollars, say experts.
The chain’s Canadian operations are reportedly being purchased by Bell Canada. Hilco Merchant Resources, one of the liquidators involved in the clearance sales, said it hoped to acquire the Circuit City brand name and Web properties.
Opinions on why Circuit City failed run the gamut, including ignoring the rising threat from upstart Best Buy in the 1990s to eliminating its household appliance business in 2000.
One major public snafu occurred in 2007 when it terminated 3,400 skilled sales personnel and then offered their jobs back at lower wages. While the company reported seven consecutive losing quarters, CEO Philip Schoonover earned millions in compensation.
“Every time there was a crossroads … they almost always did the wrong thing,” Stephen Baker, VP of industry analysis with The NPD Group, told The Associated Press. “When you make that many mistakes, eventually you end up at the edge of a cliff.”
Ironically, CEO James Marcum, in a statement, thanked staffers for their hard work during the “difficult time.”