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20% Circuit City stores to be closed

by on03 November 2008


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155 stores to be closed before the end of the year


Well, as we expected after hearing from our sources last week, Circuit City is in trouble and the trouble is perhaps a bit worse than some thought. The company will be sending in liquidators to 155 stores starting next week as the company embarks in a reorganization plan to curb the bleeding and get things back on track.

The closure of 155 stores represents 20 percent of the company’s current number of 711 stores in North America. The news was not received well on the NYSE, as they warned the company that they are in danger of being kicked off the exchange as the stock has lost 90 percent in value since the first of the year.

From what we know our sources tell us those employees in affected stores were told of the company’s closure plans this morning. Stores that have Firedog and Car Installation services will stop offering these services in the next day or so and the Firedog and Card Installation employees in affected stores will be let go.

As for the plans for the liquidation of the 155 stores that will be closed, the plan is that the liquidation team will set prices as they see fit. Effective once the liquidation team takes over the no price match guarantee, employee discounts, Circuit City ads, and the one price guarantee programs will all cease in the stores that are being closed.

If you happen to have a return of a Circuit City item or need warranty exchange, you will have to seek out a Circuit City store that is still being operating by corporate and is not being closed. Stores that are being closed will receive no new inventory and will sell off all inventories to the bare walls, and once this is completed the employees will be let go.

As for deals it is unknown how Circuit City’s liquidators will proceed on moving the inventory out of the stores. We suspect that they will not really start marking down the merchandise until it gets closer to the end. We do suspect that some deals will be able to be had, but it will take some time for the prices to get very good. In the meantime it will be interesting to see how Circuit City will rebound from this round of closures and what the future will hold for the company.

The news has to be welcomed by Best Buy who will gain a virtual stranglehold on electronics sales in communities that only offer a Circuit City and a Best Buy. The lack of competition, however, could lead to Best Buy increasing its prices in stores that have no other real local competition.

Last modified on 03 November 2008
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