Circuit City = $0
Full blown liquidation, no value remains for shareholders.
I was going to write “Wow,” but its a tough business, with brutal competition and razor thin margins. CC had too many missteps over the years — and too much debt — to reorg/recover from.
WSJ: Circuit City Stores said it has reached an agreement with liquidators to sell the merchandise in its 567 U.S. stores after failing to find a buyer or a refinancing deal.
Marketwatch:
Circuit City to seek court approval to liquidate
Circuit City Stores Inc. (CCTYQ), which filed for Chapter 11 bankruptcy protection in November, said Friday it will seek Bankruptcy Court approval to liquidate the company. Circuit City does not expect any value to remain for shareholders at this time. The retail chain had employed more than 30,000 workers in the U.S. and Canada.
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January 16th, 2009 at 11:40 am
Thinning of the herd begins after a long stall! Unfortunately no one will ever step back in to fill the shoes of this company! Never a profit will be made in electronics retail again now that they’re gone. Please don’t miss the obvious sarcasim! The faster we get the weaks ones gone, the faster we can reallocate market shares and get on to the business of business! Now if only the financials could experience this. i.e., Forego all the bailouts and rescues and let the strong ones feed on the carcasses of the weak ones like buzzards on the Serengeti.
January 16th, 2009 at 12:01 pm
So far, only the weakest of the retailers have succumbed. A few are closing some poor locations, but that’s all.
CC has run on inertia for several years, ever since they fired their best employees and replaced them with the lowest cost labor available. Their merchandise selection ranges from average to poor, depending on what you want. Their prices are only fair. Their sales staff seems weak. I suspect their closeout sale will also be pretty lame, similar to Linens and Things. They’ve been the walking dead for years.
I get most of my smaller electrical items from eBay or Amazon and the larger ones from local retailers or Sam’s Club where the return privileges are incredible and the prices are usually among the lowest for top shelf stuff. eBay rocks if you buy from a seller with a good history and know how to shop. Any idiot can pay full retail. Finding a 7qt All-Clad pot at Marshall’s for $49 is poetry.
Best Buy has a better selection and adequate prices if you want to finger the merchandise before buying it. But they’re also in need of a boost. Some of their stuff looks overpriced compared to alternative outlets, assuming you are a smart shopper. BB will probably survive simply because they’re the last store standing.
January 16th, 2009 at 12:09 pm
Awful, awful company. They deserved to die a long time ago. Just a terribly run place.
January 16th, 2009 at 12:10 pm
My trusted sources tell me that Macy’s could be in trouble (big-time debt issues). If they go down, there will be shockwaves.
January 16th, 2009 at 12:28 pm
Macy’s bought Robinsons May. They’re in the process of closing one of the former Robinson May’s in the area. I was kinda surprised they didn’t do it a lot sooner though.
January 16th, 2009 at 12:30 pm
Again, I have sources who are in retail that say Macy’s could be in trouble. They just closed one store here at Brookdale Mall north of Mpls. Granted, that mall is a desolate dump but I think they could be at least 50/50 for BK this year.
January 16th, 2009 at 12:45 pm
Circuit City had the worst locations and always underperformed Best Buy. Back when the sales people worked off commission they had the most dishonest people too, like used car salesmen. I remember 15 years ago they constantly got into trouble with misleading advertising and bait and switch. At one point in Miami they were there well before Best Buy, but people were *thrilled* when Best Buy came into the market.
Circuit City should be a case study for all retailers that you never screw your customers. We have LONG LONG memories and it’ll catch up in the end!
January 16th, 2009 at 12:49 pm
Never a true fan of CC – but they were my first stop when I needed to touch something. If their price was close to Amazon’s or another online retailer, I gave them the business.
Now, BB will get my foot traffic but I will never buy from them. Prices insanely high, poor return policy, etc. Looks like I’m buying electronics online from here on out.
January 16th, 2009 at 12:51 pm
I am convinced that shareholders for Macy’s (Federated) will be wiped out at some point. I think the Macy’s brand is too big to go under, though I would love to see it broken back up into its regional chains. Bring back Marshall Field’s, Burdines, Lazarus, etc. I do not think Federated itself as a company has ever been a viable enterprise.
It’s practically criminal that so many of America’s major retailers were allowed to be put together under an unsustainable mountain of debt by the sham company Federated.
January 16th, 2009 at 1:14 pm
Mannwich,
You in MN? My friends and I never thought Macy’s was a good brand for MN. Like Zorkon says, Marshall Fields was more Minnesotan. Of course, Dayton’s arguably fit even better. Time will tell.
January 16th, 2009 at 1:15 pm
Yep, have been here for almost four years (from NYC by way of Boston). From what I can tell, Macy’s has never been accepted here. Is that your take as well.
January 16th, 2009 at 1:40 pm
Don’t give Amazon the monopoly for on-line shopping. There are great alternatives: Powells for books, B&H Photo for cameras, Crutchfield for consumer electronics, Coastal Tool for power tools, on and on. For consumer electronics, Crutchfield provides very good information.
Among aficionados of consumer electronics, Circuit City was always a joke. Their big flat screens had colors and brightness turned way up to get the attention of casual shoppers, hell of a way to choose a TV, and they didn’t care if their floor staff knew what they were talking about. Sorry about the employees losing their jobs, but good riddance to the company itself.
January 16th, 2009 at 1:46 pm
Long time reader here, first time poster. I can’t help but laugh at the idiots who run Circuit City and feel quite a bit of Schadenfreude right now – this is the same management team that fired all of their experienced, knowledgeable workers a couple of years ago so they could get out of paying their associates decent money. The new people they hired didn’t know anything, and so naturally sales were abysmal. Their “cost cutting” failed because they were too stupid to see that it was their exorbitant bonuses and inefficient operation that was causing problems, not wages.
At the same time, the people who ran the company were diluting the stock and giving themselves huge bonuses. I’m glad this POS failed. Karma is a beautiful thing.
January 16th, 2009 at 2:02 pm
Mannwich Says: January 16th, 2009 at 12:10 pm
My trusted sources tell me that Macy’s could be in trouble
So are you calling a short here?
…and does anybody know of a reliable price comparison site on the net? The ones that google comes up with are spotty at best with shill written all over them
January 16th, 2009 at 2:07 pm
you would think at this age(of the net) there would be a site where you could punch in a name and get every price on the net for that object and every similar object. Why can’t someone write an algorithm for that? I know they haven’t because there is no price checker ‘verb’ that comes to mind to check something
January 16th, 2009 at 2:09 pm
At the same time, the people who ran the company were diluting the stock and giving themselves huge bonuses.
Maybe that was the point.
January 16th, 2009 at 2:23 pm
Where’s the TARP for retailers? Not too big to fail, I suppose.
Personally, I’d be glad to see Best Buy go, too, if only because I couldn’t stand their smarmy commercials over Christmas telling me that some stupid electronic gadget would bring happiness.
If this recession/depression/financial armageddon bears any fruit at all, it will be that owning the latest useless gadget is hardly the path to nirvana. Of course, if we all turned away from consumerism, it really would come crashing down. So much the better.
January 16th, 2009 at 2:45 pm
@Common: I would think that aside from WMT and maybe COST, all of the retailers are good shorts right now.
January 16th, 2009 at 2:51 pm
When I first saw the headlines my mind saw “Citi”. LOL– probably same zero equity.
January 16th, 2009 at 3:36 pm
“price checker ‘verb’”
http://www.merriam-webster.com/dictionary/google
goo·gle
Pronunciation:
\ˈgü-gəl\
Function:
transitive verb
Inflected Form(s):
goo·gled; goo·gling Listen to the pronunciation of googling \-g(ə-)liŋ\
Usage:
often capitalized
Etymology:
Google, trademark for a search engine
Date:
2001
: to use the Google search engine to obtain information about (as a person) on the World Wide Web
January 16th, 2009 at 4:16 pm
WRT How the Common Man Sees It and the notion of a price sweeping algorithm, I too wish someone would do that (not me-not so skilled in the higher maths). I am nut for prices- [I want to know the per day leasing cost of 15yd dual axle dump truck for hwy projects in southern Peru and what is Ferreyros financing costs for their fleet deployed on the Transoceanica (not so easy to find out).]
If we were to have a tool like the one you posit, I would note that the fundamental problem would remain:
does our knowledge (data gleaned from a Google search) corresponds to objective facts? Or as Hayek states at the end of an essay entitled: The Use of Knowledge in Society:
“It suggests rather that there is something fundamentally wrong with an approach which habitually disregards an essential part of the phenomena with which we have to deal: the unavoidable imperfection of man’s knowledge and the consequent need for a process by which knowledge is constantly communicated and acquired. Any approach, such as that of much of mathematical economics with its simultaneous equations, which in effect starts from the assumption that people’s knowledge corresponds with the objective facts of the situation, systematically leaves out what is our main task to explain.”
Divining Price is everything. What effect will increased and sharper scrutiny of price do to prices?
January 16th, 2009 at 4:34 pm
There appears to be a real scarcity of DIP financing, at least for retailers, that is preventing retailers from restructuring.
Linen’s & Things, Goody’s, Mervyn’s, Sharper Image, Levitz, and Value City are all in liquidation rather than restructuring. More to come.
Also, since most of the convert arb guys blew themselves up last year, there’s been no new convert issuance in months. During the last recession, convert arb was a booming strategy, and companies could issue converts to stay alive and delay the day of reckoning. No more. Look at Nortel. They were a serial convert issuer during the tech/telecom bust, they just filed.
January 16th, 2009 at 9:15 pm
In LA
CC has been out of it for years because Fry’s and Wal Mart have blown their doors off. Ten or more years ago they had good prices as well as a broad selection of software but trouble started when they dropped all Apple compatible programs at a time when Apple “found itself.” They simply refused to respond to competition that had huge varieties of inventory, great prices, and many times knowledgeable sales people. For any of us who have shopped Fry’s with what seems to be acres of store space and inventory CC was just a joke. I agree that Best Buy is on very shaky ground and has basically stopped trying to compete in the computer business preferring to grind customers with used car sales tactics for high end HiDef TV shit. I’d certainly sell Best Buy stock because it’s headed for the toilet.
January 17th, 2009 at 1:03 am
Common man:
For consumer electronics and computer stuff, you can get price comparisons from these:
cnet.com
google.com – click on shopping and enter the product
http://stores.tomshardware.com/ – nice filtering so you can find products even without the model number
I don’t particularly like Best Buy. Prices too high, but it’s good for looking at things or if it’s an emergency. I liked Circuit City’s buy on line so it’s ready for pickup. If you knew what you wanted, you could get some nice deals. All things being equal, my preference is newegg.com: great customer service, no ripoff’s on shipping and very competitive prices, although they may go up a bit now that CC is gonet.
January 17th, 2009 at 7:33 am
Divining Price is everything. What effect will increased and sharper scrutiny of price do to prices?
It should eliminate 75% off sales if you ask me. Stores won’t get away with charging 3 times above their costs in a proper price discovery market
@Mike in Nola Says: January 17th, 2009 at 1:03 am
Thanks Mike. I’ve used Cnet before. I don’t completely trust google but Tom’s hardware looks like a keeper.