On Monday, United States electronics retailer Circuit City announced that it would file for Chapter 11 bankruptcy protection. Second largest in its field, behind Best Buy, the company has previously announced that it would close down 155 of its locations leaving an estimated 8000 employees jobless.
The retailer also said more cutbacks will be on the way. “Circuit City was incredibly successful in the 1980s and 1990s, but they never changed after that,” says David Schick, an analyst at Stifel Nicolaus.
In August, Best Buy, reported that its profits had gone up to show a quarterly profit of US$200 million. Meanwhile, Circuit City reported a loss of $239 million in September.
Background Brief
Circuit City (Pink Sheets: CCTYQ) is an American dealer and retailer in brand-name consumer electronics, personal computers, and entertainment software.
Circuit City operates over 670 Superstores and 13 other locations in USA and Puerto Rico. Circuit City Superstores range in size from 15,000 to 45,000 square feet (1400 to 4000 m²) and offer a large selection of brand-name consumer electronics, personal computers and entertainment software.
Circuit City also has over 850 retail stores and dealer outlets in Canada. Circuit City’s locations in Canada are operated by InterTAN Canada Ltd which Circuit City acquired on May 19, 2004. InterTAN runs The Source by Circuit City (formerly RadioShack) chain in Canada (some of them now called La Source in Quebec).
Former president, CEO and chairman of the board of directors Richard Sharp was inducted into the Consumer Electronics Hall of Fame in October, 2008.
On November 3, 2008, Circuit City announced that it would close 155 stores and lay off 17% of its workforce by the end of the year as a result of continually struggling to remain profitable. On November 7, 2008, Circuit City laid off between 500 and 800 corporate employees from their Richmond, Virginia headquarters. The approximately 1000 remaining corporate employees would all be consolidated into one building in an effort to further reduce cost and improve profitability. On November 10, 2008, Circuit City filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code.
