Circuit City Files For Bankruptcy

WillDraven is just one of many who writes to tell us that Circuit City, the United States' 2nd largest consumer electronics retailer, has filed for bankruptcy under chapter 11. This news comes as no surprise as the company has been in financial trouble, recently announcing that it will be closing over one fifth of its stores and laying off 17% of its US employees in the process. "Larger rival Best Buy, which is based in Minneapolis, has said it might take over stores that distressed rivals close. Yet a flood of discounted merchandise from liquidating Circuit City stores could hurt Best Buy during this holiday shopping season, said Jefferies & Co analyst Dan Binder."

Comments

Yeah, You Could Say That

[eldavojohn]

This news comes as no surprise as the company has been in financial trouble ...

"Financial trouble" doesn't begin to describe it, their stock's been below 25 cents for a few days now. I was debating on blowing 20 bucks and demanding the paper stock be sent to me so I could have fancy roll of toilet paper to put near the can when guests are over. It wouldn't be a horrible investment as I'm sure it'd have other uses too ... lighting cigars with it, using it as wrapping paper for Christmas, etc. A man's gotta increase his perceived wealth among his peers, you know.

I can't bring myself to have much pity for them...

[Shakrai]

... given the fact that they treat their customers like criminals. Besides which, my local electronics place usually beats them on price -- and there's always online shopping.

shoplifting

[bugs2squash]

The entire loss was due to shoplifting, they should have been more suspicious of their customers. Hopefully there will be a crackdown now.

Re:shoplifting

[AbRASiON]

Is this post a joke? I can't tell, I really can't tell, if it is bravo, you got me.

If this post is not a joke, good lord, wow! You Americans and your expectations from retailers continue to fascinate me, absoloutely and utterly incredible, it's got to come to an end.

I've been using the internet now for about 12 years and I'll never forget the first time I heard some of the stories you guys would relay.
Rebates, incredibly cheap prices compared to the rest of the world, massive huge stores with IT gear in them, like KMart sized IT stores, wow!
You can actually purchase a product and then go back a week later if the price drops with your receipt and they give you the difference, what the hell? Over here that's 'tough luck buddy' (and to be honest, so it should be! you bought it when it was higher, tough!)

The deals you can find on the internet still blow me away "buy this router for 11$ get a 9$ rebate" "buy product X for 50$ with a 30$ rebate" yet these same items cost 80 or 100$ US over here!

Now I've just come across your post, and I sit here unable to comprehend it.
You're telling me you want a store to give you a cash refund on a purchased product without a receipt and you have the audacity to whine about it?
Really? Where's the bloody proof you purchased it?
You could have stolen it.
You could have purchased it cheaper somewhere else, effectively stealing from these people.
You could work for the manufacturer and get them cheaper.
It could be broken.

There's a plethora of reasons why companies demand a receipt, it's common bloody consumer knowledge, I mean seriously what next will you people expect from retail stores? "Sorry, I don't have the cash on me now but I promise I'll pay next week!"

This way of doing business and being so competitive and catering to the ever pushy consumer (and a large portion of Americans are a very pushy consumer) is what's causing business's to go bust, admitedly circuit city was a dump but really, there needs to be a sharp dose of reality kicked in here.

Disclaimer: Not all Americans are pushy, not all business's in America cater to some of the ridiculous whims of the consumer, none the less as a foreigner the above is the impression I have gathered over the past 10 years of speaking to some of you guys and gals on the internet, really - you had it good, you had it too bloody good in some ways, consider yourselves damned lucky... price protection for goodness sakes.. sheesh

La Source

[Win0ver]

Circuit City bought all the Radio Shacks here, and changed their name to "La Source: by Circuit City" Do they all get closed too?

Re:La Source

[archen]

And on that note, Radio Shack survives Circut City. Totally bizarre that nothing seems to kill that chain. I'm starting to think that if there is a nuclear war, I may just run to radio shack since they seem to strangely survive everything without rhyme or reason.

Re:La Source

[Skevin]

Radio Shack has unrecognizably revamped themselves throughout their lifetime. The original name came from back when they were selling equipment catering to ham radio enthusiasts. Then, at some point, they were only selling record players and stereos in the 40's, and suddenly the staff dumbed down - my grandfather had difficulty requesting things like 3200-ohm resistors anymore, or having them made behind the counter by staff.

In the 1960's they declared bankruptcy (just like CC this morning), but a certain Charles Tandy bought them out. Tandy was a leather mogul, and the chain was temporarily renamed... wait for it... Tandy Radio Shack & Leather! Radio Shack was the place for all your leather needs! BTW, I have a genuine Radio Shack bullwhip in my attic. Too bad I never got around to asking for a ball gag and blindfold.

Then they went back to concentrating on low level electronic components. Then they switched the emphasis on to trying to sell home computers. Then they switched to almost strictly consumer electronics.

So I don't think of Radio Shack as a cockroach, whose form hasn't changed for millions of years... It's more like the Phantom, when each one dies, it passes the name and costume to someone in the next generation, who most likely has different tactics and fighting styles.

Re:La Source

[Sponge Bath]

...passes the name and costume to someone in the next generation

I'm thinking the next move will be to
"Radio Shack - Head Shop and Erotic Toys"

I'm sure they will continue selling batteries for the various lifestyle accessories.

Didn't they push the evil DIVX?

[bennomatic]

Didn't things start to fall apart when they tried to push that crazy DIVX rent-and-throw-away DVD format?

Re:Weak

[eldavojohn]

I might be crazy, but it was always so dark in their stores. Maybe that was to enhance the rest of the lighting.

It's called a target market. They were catering to the goth market that was alienated by positive, well lit, bright blue, khaki wearing Best Buy employees.

You didn't notice the nipple rings and dark eye shadow being "standard flare" for Circuit City's uniforms? What about their efforts to exclusively offer The Crow on Blu-Ray or the Circuit City brand razor blade impulse aisles?

Oh well.

[fuzzyfuzzyfungus]

I'm not exactly optimistic about brick and mortar electronics shopping in the even grimmer world of hegemonic Best Buy(thank the FSM for a local Microcenter); but Circuit City really, really deserved it. Unimpressive prices, incompetent service, paranoid treatment of customers, that whole "Hey, let's fire our best salespeople and attempt to hire them back at insultingly low wages" incident... Reduced local competition isn't a good thing; but Circuit City was too sick to survive, or even deserve to survive.

Re:I can't bring myself to have much pity for them

[Mix Master Nixon]

Good riddance to a disgraceful company. Let's not forget how they fired all their highest-paid, most experienced employees and allowed them to re-apply for minimum wage positions. After they pulled that stunt I never spent another penny there, going way out of my way to go to Best Buy instead when I needed to purchase something from that sort of store and didn't have the time luxury of getting it from the internet. Don't misunderstand: Best Buy sucks too, but at least they're not Circuit City.

Discounted Merchandise

[CopaceticOpus]

A flood of discounted merchandise from liquidating Circuit City stores could hurt Best Buy during this holiday shopping season

I hardly think a company that sells a cable for $129.99 when a functionally equivalent cable is available for $5.43 is concerned about the availability of discounted merchandise.

Re:Discounted Merchandise

[Thaelon]

They're not even equivalent. The $5.43 cable is two feet longer. So, per foot, the monster cable is actually 3,590% more expensive

Discounted merchandise? Not likely

[sunking2]

As anyone who tried to find a good deal when compusa went under, good deals will be few and far between. Oh, you'll see lots of 30-50% off stickers, but they'll be against the MSRP or some other jacked up price. They will never come out of this and the inventory is worth more to them as an asset for some liquidation company than if they sell at too much of a loss. And I question how much inventory they really have anyway. Last time I was in there the shelves were pretty bare and I imagine the stock room is by now too. This has been well over a year in coming.

Re:Weak

[eln]

Unfortunately, they didn't take into account the fact that after spending 99% of their disposable income on black eyeliner, goths have very little money left for consumer electronics.

Re:I can't bring myself to have much pity for them

[empesey]

The receipt check they do is bogus anyway. They don't actually check anything on the receipt. Basically, they look to see you have a receipt. They never look in the bag to see what you have, and they certainly never match what's in the bag to what's on the receipt. After they do a receipt check, quiz them on what you bought. They will never be able to tell you. Never!

Re:Bailout

[truthsearch]

AIG is FAR bigger than Circuit City and tightly intertwined into the economy of the country. Nothing will change with CC going out of business except their employees losing jobs. AIG going out of business would mean huge collateral damage to the entire financial industry, which would then affect every other industry.

I'm not saying I'm for the bailout. But AIG has a massive impact where CC does not.

Make sure they have a transfer agent

[Shandalar]

Seriously - I attempted this once with a different company and was not able to get the paper shares because they lacked a 'transfer agent' at that point. Make sure they can deliver.

Re:I can't bring myself to have much pity for them

[Culture20]

Laws are different in different states. Just before CompUSA closed, I had a manager and security guard refuse to let me leave the building until I showed them my receipt. After some arguing, I gave in, then laughed in derision at the manager, saying this draconian policy is why CompUSA was losing business. Seems like Circuit City followed suit.

Re:I can't bring myself to have much pity for them

[Mr. Slippery]

What you have here is not a violation of any rights, they weren't going to search purses and handbags (although some stores do - but they clearly post that they reserve the right). It's implied consent when you shop at a store like that, and if you don't like it, don't go back.

Searching my bag - whether it is a bag I came in with, on my brand new (once my purchase is completed at the register) Joe's Discount Electronics' bag - is indeed a violation of my rights. I don't surrender my rights because you put up a sign.

If specific and articulable facts lead you to a reasonable suspicion that I have been involved in a crime, they can hold me and call the cops. Store personnel have no right to search my person or my effects, and they do not gain such by posting a sign. All they can do if I don't comply with their store policy is ask me to leave and not come back - which, when treated like a criminal, is exactly what I want to do anyway.

Re:Weak

[Lumpy]

Problem is they kept pushing a card game on everyone...

http://en.wikipedia.org/wiki/Gother_Than_Thou

for more info about it.

Plus the emo kids were all committing suicide in the aisles when they found they could not buy copies of panic at the disco.

Re:I can't bring myself to have much pity for them

[Shakrai]

What you have here is not a violation of any rights, they weren't going to search purses and handbags (although some stores do - but they clearly post that they reserve the right)

I don't think putting up a sign gives them the right to go through my things. At best they could ask me to leave if I refused to let them go through my bags. Of course this is a moot point unless they are going through the bags before you enter the store, because by the time they asked you to leave you would already be on your way out the door anyway.

It's implied consent when you shop at a store like that, and if you don't like it, don't go back.

I'm sorry but it's not. If I put up a sign on my front door that says "all female guests waive the right to refuse to have sex with me" does that mean I can rape with impunity? All they can do is ask you to leave -- but unless they are enforcing this policy when you enter the store (as opposed to when you exit) it's kind of like closing the barn doors after the horses have already escaped.

To think, that guy could have avoided all the hassle, all the wasted time and money, just buy opening the plastic Circuit City bag and showing the receipt.

He probably could have. Some people are willing to give up their rights to avoid a little hassle. I'm not one of them.

Yes, I read where you said the local place beats them on prices. Then why do people shop there? There must be some compelling reasons.

Because Circuit City is on the flashy commercial strip and the local place is tucked away in an old part of town that most people aren't familiar with?

USE UP YOUR GIFT CARDS!

[BUL2294]

One thing that people don't realize is that when retailers declare bankruptcy, their gift cards are worthless. You're considered an unsecured creditor, which puts you in the back of the line among all other creditors. If there's anything left, you might get pennies on the dollar for what the card is worth--a few years down the road. Some companies plead their cases with the courts to allow gift card holders to use them--after all, if those people lose their card values, they won't be shopping at the now-bankrupt company, especially when the company needs those customers most...

At least Consumers Union is trying to petition the FTC to force companies to honor outstanding cards... But I can only see this happening if a retailer chooses to reorganize--forget it if they're liquidating.

So, the best advice is to use up your gift cards NOW , before the retailer goes under. Given that Linens & Things, Lilian Vernon, Sharper Image, and now Circuit City all went bankrupt in 2008, this problem will get worse FAST.

I'm curious to know if this is a problem limited to U.S. retailers... Is this an issue in Europe, Japan, etc.?

Re:USE UP YOUR GIFT CARDS!

[powerlord]

Best new idea for Holiday Stocking Stuffers:

Giftcards from companies about to file for bankruptcy.

Hey, its not YOUR problem if the $100 giftcard (that you only paid $5 for), is worthless by the time the recipient can actually use it.

It's the thought that counts ... right? :)

Re:More Evidence that the American Consumer

[tgd]

If you paid $600 for your computer, it might've had an enter key on the keyboard ...

Re:I can't bring myself to have much pity for them

[Shakrai]

I'm not familiar on Ohio law, but in many places it's illegal to not have some form of ID when over 18.

Too bad, because if you had bothered to become familiar with Ohio law before opening your mouth you would have discovered that Ohio law specifically says that you aren't required to hand over ID:

"Nothing in this section authorizes a law enforcement officer to arrest a person for not providing any information beyond that person's name, address, or date of birth or for refusing to describe the offense observed."

And BTW, just where in the United States is it illegal not to have ID on you?

Commissioned Sales People

[zubikov]

I worked at CC from 2000-2002 as a commissioned salesman. CC differentiated themselves by being the only national electronics chain with a loyal, knowledgeable, community-oriented staff. We're not talking 17 y/o high school juniors, but middle-aged sharks who at least knew what they were selling. This worked and stores were in the black, but the 2001-2003 economic conditions caused the clueless management to shift the blame on the sales force and divert to the hourly model. Since then, the store became a cheap knock-off of Best Buy with no value added to the customer. It was only a matter of time before this happened. They were too late to the online game, and were wiped out by the Neweggs and the Amazons. RIP another pointless store that takes pride in making people borrow money they can't afford to pay back. Who's next?

Re:I can't bring myself to have much pity for them

[squiggleslash]

Too likely to get into trouble. A simpler solution is to do exactly what the manager is asking for: show them the receipt. But at the Returns desk.

Re:I can't bring myself to have much pity for them

[corsec67]

It depends on the state, but in Colorado, an employee can detain someone if the theft detection alarm goes off.
From the Colorado Revised Statutes, 18-4-407.

Re:I can't bring myself to have much pity for them

[Shakrai]

You're expecting me to become familiar with Ohio law?

Only if you intend to make statements about it, i.e: "He did something wrong when he refused to show ID to the police officer". If you don't intend to make statements about Ohio law then I guess you don't really need to become familiar with it.

I'd try to find a resource for where it's illegal to not carry ID on you, but any Google search for it is flooded by voter ID requirements.

So in other words you are talking out of your ass and have no proof to back up your claims? Well, at least you were right about one thing: "And I have a feeling I'll get modded troll for this post."

Re:I can't bring myself to have much pity for them

[Paradise Pete]

And BTW, just where in the United States is it illegal not to have ID on you?

I once visited the Creation Museum and got some ID on me. Fortunately it scrubs off.

Now that Circuit City has failed...

[IGnatius T Foobar]

...I'll bet its owners now wish they had accepted the extended warranty.

Re:I can't bring myself to have much pity for them

[DisKurzion]

It wasn't just the commission based sales force. My friend worked in the stock room for several years, and was making a pretty decent wage, and was up for a promotion within a month (his current supervisor was stepping down).

He was one of those victims of the "we raised your pay too much so now we're gonna fire you."

He wasn't even allowed to re-apply because "he was too qualified."

Firing my friend in that manner lost them a lot of business. I also boycotted Circuit City when that happened. As did all of my other friends, and our families. All in all, that added up to about 50 people.

I suspect that this situation was not unique, and was undoubtedly the killing blow through the heart of the weakened CC.

Re:I can't bring myself to have much pity for them

[PeelBoy]

No, he's upset that they fired all of their best and most experienced employee's.

It wasn't just top sellers. It effected everybody.

And why the hell would you fire your top sellers anyway? How retarded is that?!?!?!

When you fire your top sellers and your most knowledgeable employee's what does that leave you with?

It wasn't exactly a brilliant move. I'm sure it saved them money in the short run but 2 years later they're bankrupt and closing most of their stores.

Re:I can't bring myself to have much pity for them

[Surt]

You won't succeed, as it's not legally required in any US state. Police officers can demand your name, and in some cases your address and destination. But they can't demand that in the form of state issued id. They may in some states detain you for up to 2 hours to confirm that what you've told them, and you might be able to go about your business faster if you hand over id, but you are NOT required to do so.

They can definitely demand a driver's license if they are stopping you while you are driving.

Re:Bailout

[WinPimp2K]

"AIG is, quite simply, too big and intertwined with the American financial system to be allowed to fail. Period"

What that statement really means is that AIG is, quite simply too big to be allowed to exist. It should be broken up into many smaller entities - each with their own *separate* management and board of directors so that one or more components can fail without devastating consequences to the overall economy.

Re:Weak

[Bootarn]

I'm Goth. Just to shine light on a few things:

• "The Crow" is hollywod crap compared to some other Gothic movies.
• I don't cut myself.

Futhermore, I know people who cut themselves. They're emotionally unstable, and this is nothing to joke about.

How to Ruin a Company from Moon of Alabama.org

[Philip K Dickhead]

Main How To Ruin A Retail Company

A prime case study on how to ruin a retail company:

• Profits from sales were down a bit, because some retail sales changed to the Internets.
• Management switched salespersons from commission based pay to meager hourly wages.
• Sales droped further.
• Management fired long-term, experienced and expensive salespersons and hires unqualified but cheaper people instead.
• Sales drop further.
• Overpaid management gets fired.
• New management finds the company is bankrupt.

Circuit City Fires 2,000 Workers to Cut Costs, Feb. 6, 2003
Circuit City Stores Inc. has fired 2,000 people, including salespeople at its outlet near Gateway Mall in Springfield, in a move to cut costs.

The electronics retailer announced it is firing 5 percent of its work force and also converting commissioned sales people to hourly pay.

Circuit City to Fire 3,400, Hire Less Costly Workers, March 28, 2007
Circuit City Stores Inc., the second-largest U.S. electronics retailer after Best Buy Co., fired 3,400 of its highest-paid hourly workers and will hire replacements willing to work for less.
...
"Firing 3,400 of arguably the most successful sales people in the company could prove terrible for morale," Colin McGranahan, an analyst with Sanford Bernstein & Co., wrote in a note today. "The question remains as to whether Circuit City can rebuild in time for the all-important holiday season."
...
Circuit City shares rose 35 cents to $19.23 at 4:18 p.m. in New York Stock Exchange composite trading.
...
In 2003, Circuit City switched employees from commission- based pay to hourly pay, matching an earlier move by Best Buy. That switch had a "dramatically negative impact on sales," McGranahan said today.

Circuit City, Electronics Retailer, Seeks Bankruptcy , Nov. 10, 2008
The petition for Chapter 11 protection in U.S. Bankruptcy Court in Richmond, Virginia, listed $3.4 billion in assets and $2.32 billion in liabilities, driving the shares down 56 percent before the New York Stock Exchange halted trading.
...
Circuit City fell 14 cents to 11 cents at 9:30 a.m. before the start of trading on the New York Stock Exchange. The NYSE halted buying and selling of the shares after the stock's early plunge.
...
On Sept. 29, Circuit City reported a loss of $239.2 million that was more than triple from a year earlier after sales fell for the sixth straight quarter.

Without well motivated sales-persons any specialized retailer can only lose.

Here the shareholders lost too. No tears for them. Why did they not stop the disastrous management plans?

Only long term Circuit City CEO Philip Schoonover, who was only fired six weeks ago, made a fortune by ruining the company. He got more than twice per year of what successful retail chain CEO's got. From the second link:

Chief Executive Officer Philip Schoonover was paid $8.52 million in fiscal 2006, including a salary of $975,000. Best Buy CEO

Re:I can't bring myself to have much pity for them

[WeeLad]

What sort of Nazi made up that rule?

Re:I can't bring myself to have much pity for them

[Splab]

You can keep arguing from here to hell freezes over, but it wont make it true.

By reading this response you owe me 1 million dollars. You had the right to not read it, but read it voluntary and now owe me a million dollars.

Re:Weak

[Colonel Korn]

I really havn't visited Circuit City since they stopped paying the employees commissions. When I used to enter a Circuit City, an employee would FIND ME, and try to sell me something.

Which is exactly why I don't shop at commissioned stores when I can help it. I prefer to educate myself from an impartial source rather than have propaganda thrown at me. Those sellers were motivated enough to negotiate ridiculous deals on things like TVs, but that's only relevant to me once every ten years.