Circuit City Gets Financing as Same-Store Sales Plummet23 Dec, 2008 By: Erik Gruenwedel
Bankrupt Circuit City Stores Dec. 22 received court approval for $1.1 billion debtor-in-possession financing that will allow the Richmond, Va.-based consumer electronics chain to maintain operations and pay vendors, employees and related expenses, according to a filing.
The retailer also disclosed that same-store sales (open at least 12 months) at Circuit City locations not slated for closure had fallen 43% to 50% since the Nov. 10 bankruptcy filing — down significantly from previous budgeted comp declines of 35%.
“With the continued deterioration of the macroeconomic climate, results from other retailers and our operating under Chapter 11 reorganization protection, the fact that our sales are somewhat weaker than our original forecast should not be considered a negative,” spokesman Bill Cimino said in a statement. “We are improving our gross margin rate and that is helping to offset the sales number as well as helping us manage our DIP (debtor-in-possession) budget.”
Separately, the court allowed Circuit City to void severance payments to 40 former employees, including CEO Philip Schoonover, who was to receive $1.8 million in belated compensation and benefits, according to a filing.
Circuit City also clarified a Credit Suisse report that said it would shutter additional stores to the 155 locations previously disclosed.
“Circuit City has not announced any plans for additional store closures,” the chain said in a statement.