Bankrupt Circuit City Stores Inc., the nation's second-biggest consumer electronics retailer, said Friday it failed to find a buyer and will liquidate its 567 U.S. stores. The closures could send another 30,000 people into the ranks of the unemployed.
"This is the only possible path for our company," James A. Marcum, acting chief executive, said in a statement. "We are extremely disappointed by this outcome."
The company had been seeking a buyer or a deal to refinance its debt, but the hobbled credit market and consumer worries proved insurmountable.
Circuit City isn't the only store this is happening to, as the article reports, KB Toys, department store chains Goody's Family Clothing and Gottschalks Inc...all suffering, with Goody's planning to liquidate and Gottschalks planning to reorganize. Both filed for bankruptcy this week.
"Regrettably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders," Marcum said.
Shareholders are likely to receive nothing, as is typical in bankruptcy cases. It was unclear what would happen to the company's 765 retail stores and dealer outlets in Canada.
"Very, very sad," said Alan L. Wurtzel, the son of company founder Samuel S. Wurtzel, and the chief executive from 1972 to 1986, board chairman from 1986 to 1994 and vice chairman until 2001. "I feel particularly badly for the people are employed or until recently were employed."
I really do not want to sound cold-hearted here, but we are a nation that has over done, over stretched and for many years I have asked how these competitors could build practically on top of each other and still make enough money to stay in business.
In some places there are multiple stores supplying the same need, all within 2 or 3 mile radius, eventually this type of over competing was going to cause one to come out on top and one to lose.
Sure, if the economy was better they might have been able to hold out a little longer, but that would have been postponing the inevitable.
Competition is great, it is the spirit of capitalism, but choosing smart locations to supply a need that isn't being supplied already is at the heart of good business planning, and for many businesses nowadays, the first instinct is to build on top of another supplier, try to get their existing customers instead of staking out and area of their own.
Much of this was bound to happen and while I hate it for the employees that will suddenly find themselves job-hunting, a little weeding out truly might be a good thing in the long term.