Circuit City To Liquidate After No Buyer Surfaces
39 minutes ago - Dow Jones News
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CCTYQ 0.037 -75.33%
As of 12:32 PM ET 1/16/09
DOW JONES NEWSWIRES
Circuit City Stores Inc. (CCTYQ) announced Friday it would being to liquidate its assets, after the nation's second largest consumer-electronics chain by sales failed to reach an agreement with creditors and lenders and was unable to sell itself.
The development, which will put 30,000 people out of work in the U.S. and Canada, shows the ultimate failure in the company's repeated efforts to improve its fortunes.
At one point, the company sacked thousands of veteran salespeople and replaced them with lower-paid and less-experienced workers, believing that sales wouldn't suffer as a result. They did, and revenues - along with the damage to Circuit City's reputation - was never undone.
Circuit City filed for bankruptcy protection in November shortly after the ailing chain said it would close 21% of its U.S. stores to save cash. There are slightly more than 550 remaining. The company has found itself unable to fully compete effectively against direct rival Best Buy Co. (BBY) along with broader retailers such as Wal-Mart Stores Inc. (WMT).
A bankruptcy court had set a Friday deadline for Circuit City to reach a deal with a buyer, though it said an extension was possible. Golden Gate Capital was considered a leading bidder, with other possible suitors including Mexican billionaire Ricardo Salinas Pliego, who acquired one-quarter of Circuit City's stock after the bankruptcy filing.
But by Wednesday, Bloomberg reported Circuit City's assets might be bought by companies that would sell off remaining merchandise and shut down the chain.
Retailers across the country have struggled with falling sales and tighter credit conditions, which has pushed a growing number of companies to close stores, layoff employees or file for bankruptcy. Other retailers that have announced liquidation including Linens 'n Things, Bombay Co., Mervyn's LLC and Sharper Image Corp.
