http://money.cnn.com/2009/01/16/news/companies/circuit_city/index.htm?postversion=2009011617

Court approves bankrupt electronics retailer's motion to liquidate and close its remaining 567 stores.


By Parija B. Kavilanz, CNNMoney.com senior writer
Last Updated: January 16, 2009: 5:50 PM ET

NEW YORK (CNNMoney.com) -- Bankrupt electronics retailer Circuit City Inc. said Friday it will close its remaining 567 U.S. stores and sell all its merchandise.

The company said it has 34,000 employees.

"We are extremely disappointed by this outcome," James Marcum, acting CEO for Circuit City, said in a statement. "We were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction in the limited timeframe available, and so this is the only possible path for our company."

In a filing with the U.S. Bankruptcy Court for the Eastern District of Virginia, which a judge approved late Friday, Circuit City - the No. 2 electronics retailer after Best Buy (BBY, Fortune 500) - said it had reached an agreement with four companies to start the liquidation process.

The company said the sale would begin Saturday and run until March 31, pending court approval.

The retailer's Web site and call center will cease to operate after Jan. 18.

Circuit City said employees will receive 60 days' notice of the termination.

Employees who are laid off earlier will get pay and benefits for the 60-day period beginning Friday, the retailer said.

Those who remain with the company to assist with the liquidation, will receive pay and benefits.

Circuit City also operates about 765 retail stores and dealer outlets in Canada. The company said its Canadian operations, which employ 3,000 workers, will continue to operate.

The company said it will redeem its gift cards through the liquidation sale, but the cards will have no value once the stores are closed.

"This is very significant. It shows you how bad things are for the retail industry," said George Whalin, president and CEO of Retail Management Consultants.

Whalin said management mistakes over the past few years combined with the recession brought down Circuit City.

"This company made massive mistakes," he said, citing a decision to get rid of sales people and other mismanagement.

What's more, given the credit market freeze, Whalin added that no manufacturer wants to sell to any retailer who doesn't have money to pay for the merchandise.

At the same time, Whalin said there's still a very slim chance that one or more firms that have expressed an interest in buying Circuit City could still buy it out of bankruptcy over the next few days.

"I wouldn't say it's completely over yet for Circuit City, but it's almost over," Whalin said.

Love Goel, CEO of Growth Ventures Group, a private equity firm focused on retailers, agreed with Whalin.

"Circuit City isn't a viable business in its old incarnation when half of electronics sales have moved online," Goel said. "CompUSA and Tweeter also didn't make it for the same reason," referring to two stores forced to close most or all of their locations.

However, Goel speculated that Circuit City could still find a lifeline if Golden Gate Capital, one of the reported lead bidders for the merchant, bought the company and restructured it primarily as an online business with very few physical stores.

"This would eliminate overhead costs, vendor conflicts and other issues," he said. "Circuit City has an almost $1 billion online business. So there is a future for it in that regard."

NPD Group's retail analyst Marshal Cohen warned that no retailer is "sacred" in this environment unless "you have a service model that differentiates you from the competition and keeps pace with changing needs of the consumer."

He said Circuit City was late to the game with its Firedog customer service business, and it didn't resonate with customers as well as Best Buy's Geek Squad was business.

What's more, Cohen said Circuit City found itself in the unfortunate position of becoming the "monkey in the middle" as Wal-Mart (WMT, Fortune 500) aggressively moved into the electronics market with its low prices model, and Best Buy continued to widen the gap with its competitors and dominate as the industry leader.

"Circuit City just got stuck in the middle for too long," said Cohen

that's happened because they rape people with their high prices

Recession's coming home for real, people.

Quote:

---

So how will this affect the porno industry? Will we see more of new faces eager to do things for cash?

---

There were only 3 new Gag Factors last year, instead of 4. That's a 25% decline. Porn is something folks can cut back on when money gets tight. Less revenue means less money for production. Instead of quality talent, stuff is being made with lame bitches who will work cheap. Instead of buying quality DVD porn, people are getting free internet crap. The only up side is that folks will be doing extreme shit to try to get something sold, so we are seeing more extreme sex.

-Chuck, Vegetarian fanboy

We went to Circuit City yesterday looking for killer deals, and the prices were still high as ever. There were a LOT more customers than usual, thinking the same thing I guess. Nope.
Even the employees said not to expect any deals until the very very end.
They said that the suits are aware that people are swarming after all the news, and they will pay whatever price; after driving all the way there, fighting for a parking space, and being high on the prospect of a new flatscreen, etc, that they will rationalize not leaving the store empty handed, I said fuck this, and we left. To the beach.

fuck circuit city...let em die.

"America's chickens comin home....to roost!" - Have2cit

^
Best Buy I am sure will but alot of discounted inventory.

Teacher are not do their job

I was at a Circuit City today. 10% discount on 90% of the stock and everything was still overpriced. However, the lines were long and fools were snapping stuff up like it was going at 70% off.

No, I was out in Jersey for the day.

im going tomorrow only for see what they have, but no rush im not a desperate shopper

http://clarkhoward.com/liveweb/shownotes/2009/01/20/14950/


Jan 20, 2009 -- Beware of going out of business sales
Are you tempted to try to steal a deal at Circuit City now that the chain is going out of business? Be careful -- you may actually wind up paying more than you expect!

Liquidation sales can be good during their final days, but Clark has a warning about the kinds of prices you'll see in the early and middle stages.

Here's the deal: Failing business like Circuit City put their assets up for bid and a third-party liquidation firm comes in to handle the going out of business sale. These liquidators are experts at creating the illusion of a deal. Normally, they bring in "fake" merchandise that was never in the store before and jack up the prices just to mark them down.

So even as they supposedly discount, they still make huge margins by pretending the merchandise was worth much more upfront. You think you're getting a deal, but you're really getting rooked.

On a human note, 34,000 former Circuit City employees are now being added to the unemployment rolls. Clark believes Circuit City's real downfall came when they decided to cut costs by firing knowledgeable staff in 2007. You know the end is near anytime a company sees its people as an expense instead of a money-making asset.

Finally, there's a related warning that Clark wants to sound regarding the high/low pricing model beloved by electronics retailers and others. The idea here is to lure you in on a sale item and then sell you other things on a markup.

For example, HDTVs are very price competitive at most retailers. HDMI cables, however, can be purchased for as little as $2 or more than $100 depending on the retailer. The difference? $98 -- the cable is exactly the same! So beware of jacked up prices on some goods that offset retailer losses on other merchandise.

When I used to work for Staples as a BM(Business Machines Sales Associate) there was this thing called CIPS. CIPS was pretty much the "whole package" if you were buying printer. C is for Cord, I is for Ink, P is for Paper and S is for a Service Plan. Staples was relly making the money on the C and P, the Staples brand USB cords were pretty much every 6 feet around the technology department and they were selling for $30.00 on average, while you could get a USB cord for $3.00. And if you bought paper then 95% it would probably be a Staples brand paper, and Staples actually own the paper mill. The S part, the Service Plan was pretty much bullshit. We had a contest between all BMs who would sell the most printers with at least a service plan and the winner would get a $100.00 Epson Printer. I sold the most printers with the Service Plan, it was 27 of them for whatever perior of time the contest was running for and I got the Epson. Probably like 80% of the printers that I sold was a shitty Lexmark All-In-One that had the telephone built in it. I told to the customers that this was the best thing that they could get on the market for the price. I never mentioned that the software sucked big time and that we had ton of returns on Lexmarks.

http://www.internetretailer.com/dailyNews.asp?id=30424


Systemax systematically wins its bid for CircuitCity.com
There’s still the formality of approval by a bankruptcy court judge, but Systemax Inc. is the apparent winner of the auction to acquire the assets of CircuitCity.com.

On Monday in the New York office of Circuit City’s bankruptcy law firm, Skadden, Arps, Slate, Meagher & Flom LLP, Systemax, No. 21 in the Internet Retailer Top 500 Guide, was the winning bidder to acquire the assets of CircuitCity.com and certain undisclosed customer information related to the web and other intellectual property.

Systemax, which already operates TigerDirect.com and CompUSA.com, put in a $6.5 million stalking horse bid to acquire CircuitCity.com last month. A stalking horse bid occurs when an interested buyer is chosen by a bankrupt company as the preferred acquirer of its assets; the bid closes the door on very low bids for the assets up for sale.

Systemax isn’t talking publicly about its bid or its immediate plans for CircuitCity.com, but a judge for the U.S. Bankruptcy Court for the Eastern District of Virginia is expected to hold a final hearing to review and close any related issues.

One issue still to be decided is approving the final details to protect the privacy and security of consumer records that will be included in the sale of Circuit City’s web assets. An independent ombudsman hired by the court has recommended a final sale. “The ombudsman recommends that the court approve the sale of the consumer records to Systemax, the bidder selected at the auction on May 11,” according to Circuit City’s latest court papers.

I sold 2400 shares of their stock just in a nick of time. (It was dirt cheap when I bought it)
Came out of it with a $400 gain.