Circuit City in Trouble?

[Melbosa]

Circuit City is closing 155 stores in the US and laying of some 7000 people.  Could they possibly be near bankruptcy?

Circuit City Stores Inc. is closing 155 of its more than 700 U.S. stores by Dec. 31. The stores are spread throughout 28 states, including multiple locations in areas like Phoenix and Atlanta. It is laying off about 17 percent of its domestic work force, which could affect up to 7,300 people.

James A. Marcum, vice chairman and acting president and chief executive, called the decision to close stores "difficult, but necessary."

"The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors," Marcum said in a statement. "The combination of these trends has strained severely our working capital and liquidity."

Source: http://ve3d.ign.com/articles/news/42747/Circuit-City-Closing-155-Stores

Now in Canada, I wonder if we'll start seeing "The Source" closing down some shops?

[Mr. Analog]

I wonder if The Source is a deal much like the old Radio Shack where they are just using the name and some of the distribution.

I think those stores do pretty well in Canada, mostly because they are a convenient place to get odd electronic necessities (like alarm clocks, power adaptors and cables) at a pretty good markup (for the store, not for us consumers).

And they have that mind share, I mean when I think "cable splitter" I think of The Source first (sadly).

[Melbosa]

Just a question back, do you really still think locally for cable requirements?  I know in a pinch yeah, if you need it right now... although I would be buying mine at London Drugs (first place I look for cabling myself).  I, as you said, can't stand the mark-up at the Source... insane!

If I need cabling though, the first place that comes to mind is online resellers - MonoPrice or that Blue place. 

On a side note:  A&B South finally had their closing out sale southside Oct 23rd, 2008 weekend.  Only one store left in Canada now, and it is in Lazy's area.

[Mr. Analog]

Well, here's the thing sometimes I need a [SPECIALITY ADAPTOR] today and not two weeks from now, if I go into The Source or London Drugs and they have one for what I would consider a decent price then I go for it.

I buy most of my audio/video cabling through Mother's or Axe Music now (cheap AND good), but sometimes I'll need something like a male-to-male stereo Y-adaptor in a pinch that's easy for me to pick up there.

[Melbosa]

Well, here's the thing sometimes I need a [SPECIALITY ADAPTOR] today and not two weeks from now, if I go into The Source or London Drugs and they have one for what I would consider a decent price then I go for it.

As I said in a Pinch yeah, I agree, if you need it now you're stuck.

I buy most of my audio/video cabling through Mother's or Axe Music now (cheap AND good), but sometimes I'll need something like a male-to-male stereo Y-adaptor in a pinch that's easy for me to pick up there.

Interesting.  I have never bought anything from them before.  I would have never thought of them myself.

[Mr. Analog]

I buy most of my audio/video cabling through Mother's or Axe Music now (cheap AND good), but sometimes I'll need something like a male-to-male stereo Y-adaptor in a pinch that's easy for me to pick up there.

Interesting.  I have never bought anything from them before.  I would have never thought of them myself.

They have pretty much everything in stock, pro-grade and in a wide variety of price ranges. I don't think I could buy speaker cable or RCA cable and other assorted doodads any cheaper (keeping in mind, when you buy speaker cable there you are buying a spool and not a length, but everything else is pretty normal).

I really can't think of a better place to go for things like headphones and the like than Axe. I once bought a pair of Roland RH 80 studio monitors for like $40! You can't beat that!!

I've started going to Mother's pretty much for all my cabling/connection needs and Axe for everything else.

I dunno, I got real good service at both as well and maybe it makes me predisposed to buying from them.

[Darren Dirt]

My brother is the current manager at the Westmount location.

Obviously, with Christmas around the corner, nothing will happen until after that critical season is over.

From what I understand, "InterTan" still owns the stores and products etc. but can't use "Radio Shack" as a brand name anymore (as of, like 2002 or something) and InterTan ITSELF got bought out by Circuit City Inc. -- thus the new name "The Source" ("by Circuit City" is necessary cuz "The Source" as a brand was already taken).


Circuit City the American Company also owns a number of other outlets besides the CC stores in USA (which are basically the #2 competitor against Best Buy). Those other outlets include some specialty service type of shops, mostly focused on electronics and gadgets and the like. But the big business in which CC competes is the electronic Big Box store, getting their ass handed to them by Best Buy (and probably Wal-Mart, my guess).


But keep in mind, many of the TSbCC stores in Canada have a virtual monopoly on components, batteries, toy RC cars, etc. even though Zellers or Wal-Mart carries some similar things like that, when it comes to cheap patch cords or bulk packs of batteries or the like there will always be a big repeat-customer market (lotsa old people, hate to say it, who HATE going to the busy stores like Wal-Mart!) that, heck, still call these places "Radio Shack" or just "The Shack". So the stores will likely remain open (with a few unprofitable locations likely closing) but may be bought out by another company that is willing to take on whatever debt that the InterTan division has accumulated, with a new name change of course... Kinda like how the Richard Gere character in Pretty Woman took failing mega-corps, broke them up, and sold the profitable divisions to interested parties.

IMO, of course. My brother, needless to say, was in a panic when he first heard about the US store closures, but upon closer inspection it appears it's them Big Box stores that aren't gonna stay afloat, but his district manager has not heard anything definite about the fate of the Canadian stores (i.e. those under the InterTan umbrella).



ps...

Well, here's the thing sometimes I need a [SPECIALITY ADAPTOR] today and not two weeks from now, if I go into The Source or London Drugs and they have one for what I would consider a decent price then I go for it.

I buy most of my audio/video cabling through Mother's or Axe Music now (cheap AND good), but sometimes I'll need something like a male-to-male stereo Y-adaptor in a pinch that's easy for me to pick up there.

Good to see you've found local places like Mother's or Axe (that have more than just instruments and sheet music ) ... keep in mind often the Radio Shack stores were in smaller markets, taking up a relatively small amount of square footage for the kind of markup they would make on the cords and bulbs and capacitors and the like... So not every town has the equivalent of Mother's or Axe, methinks. The wall of headphone adapters alone makes it a draw for those people who can't find anything but the "iPod accessories" at Zellers or Wal-Mart (sometime you need RCA to 1/4 inch with a 12 inch cord, and you need it "today"! )

[Mr. Analog]

You've perfectly articulated my feelings Darren.

I think the other thing for me specifically is that often the box stores are isolated and usually house an A/V "monoculture" (iPod only accessories, only two brands of headphone or cables, etc). For me to trip between two or three box stores in a day is just not possible. Variety and convenience is what sells me on The Shack, Mother's and Axe.

[Mags]

 

On a side note:  A&B South finally had their closing out sale southside Oct 23rd, 2008 weekend.  Only one store left in Canada now, and it is in Lazy's area.

Couldn't be happier for the a-holes. There was a whole lot of stupid running around in that company.

That being said I will miss that it was one of the last places you could negotiate your price. You still can at places like Best Buy if you get the right salesman, but it's much more a chore.

[Darren Dirt]

Variety and convenience is what sells me on The Shack...

Ha, ha! You've exposed yourself as teh old:

...there will always be a big repeat-customer market (lotsa old people, hate to say it, who HATE going to the busy stores like Wal-Mart!) that, heck, still call these places "Radio Shack" or just "The Shack".

[Mr. Analog]

 

On a side note:  A&B South finally had their closing out sale southside Oct 23rd, 2008 weekend.  Only one store left in Canada now, and it is in Lazy's area.

Couldn't be happier for the a-holes. There was a whole lot of stupid running around in that company.

That being said I will miss that it was one of the last places you could negotiate your price. You still can at places like Best Buy if you get the right salesman, but it's much more a chore.

Goddamn right man. A&B started dying about four years ago at the downtown location and the rot continued from within. When they started hiring extra-special morons I could see the writing on the wall. Now the only place downtown to buy music new is friggin' HMV which is like douchebag central.

[Tonnica]

I remember reading about the troubles for the U.S. Circuit City stores a few months back on Engadget. I wouldn't be surprised to see a few The Source by Circuit City stores go up in smoke in the first quarter of next year. Even with their expanded offerings there's only so much each branch store can do to stay afloat when the main company is having issues.

As far as the old downtown A&B Sound goes, didn't they start rocketing downhill when the management changed? When the in-store experience was good it seemed like they had a lot of business and there was rarely an empty till. When it went downhill the quality of customer service dipped to jerkass level, the number of active tills that could process payments was usually only 1 or 2 out of five, and foot traffic decreased. Then they wasted a whole ton of money on remodeling the interior in a hideous disorganized fashion before closing anyways.

[Darren Dirt]

I remember reading about the troubles for the U.S. Circuit City stores a few months back on Engadget. I wouldn't be surprised to see a few The Source by Circuit City stores go up in smoke in the first quarter of next year. Even with their expanded offerings there's only so much each branch store can do to stay afloat when the main company is having issues.

Agreed, but the worst thing is customers might be wary of making considerable purchased now cuz -- even if the Canadian stores are essentially disconnected from the American bigbox stores' problems -- the NAME includes "by Circuit City". I wish (cuz I don't want any of them stores to close, for multiple reasons) those folks at InterTan (or CC) had taken the trouble to, oh I dunno, name them Canadian outlets something like "The Electronics Source" or "The Source for Electronics" or, heck, "Electronics Shack"

[Tom]

The CC problem has been going on for a couple years ago. I've been seeing articles pop up every few months about CC's trip down the drain.

Aside from this new, most recently Blockbusters was going to buy them out, and hopefully change their business model enough to keep both companies afloat (Blockbusters is having problems too). But after BBs took a look at the books and whatnot they backed away from the deal rather quickly. Before that some liquidator was going to come in and auction off bits till there was nothing left.

[Melbosa]

Bankruptcy inevitable; filled for chapter 11: http://news.yahoo.com/s/ap/20081110/ap_on_bi_ge/circuit_city_bankruptcy

NEW YORK ? Circuit City Stores Inc., the nation's second-biggest electronics retailer, filed for bankruptcy protection on Monday but plans to stay open for business as the busy holiday shopping season approaches.

It filed under Chapter 11 of the bankruptcy code, which will allow it to hold off creditors and continue operations while it develops a reorganization plan.

The Richmond, Va.-based company has been struggling as nervous consumers spend less and credit has become tighter, and the retail industry overall is facing what's expected to be the weakest holiday season in decades.

Circuit City also said it would cut 700 more jobs, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers.

"This isn't a surprise," JPMorgan analyst Christopher Horvers said, adding that the reorganization could help the company get out of leases for certain bad store locations.

Circuit City, which has had only one profitable quarter in the past year, has faced significant declines in traffic and heightened competition from rival Best Buy Co. and others. It said it decided to file for bankruptcy protection because it was facing pressure from vendors who threatened to withhold products during the holiday season.

"At the end of the day I think it's really about an inventory position," Horvers said. "If they can get inventory into the stores, I can think they'll remain competitive."

The company's biggest creditors are its vendors: Hewlett-Packard has a $118.8 million claim followed by Samsung ($115.9 million), Sony ($60 million), Zenith ($41.2 million), Toshiba ($17.9 million) and others. Smaller creditors include GPS navigation system maker Garmin, Nikon, Lenovo, Eastman Kodak and Mitsubishi.

Horvers added, "I think it's encouraging that they were able to secure financing." Circuit City said it had lined up $1.1 billion in loans to provide working capital while it is in bankruptcy protection. That replaces a $1.3 billion asset-backed loan it had been using.

Loans to operate while in bankruptcy are called debtor-in-possession, or DIP, loans.

"That's a big DIP in the current market," said John Penn, a partner at Haynes & Boone who is not involved in the case. "To secure that size DIP now is quite a achievement. With the news of the cuts last week ? and vendors wanting to know they can get paid ? having a recognizable source like a DIP can calm a lot of vendor concerns."

The company said in its filing that it had $3.4 billion in assets and $2.32 billion in liabilities, as of Aug. 31.

Circuit City Stores Inc. announced a week ago it planned to close 155 of its more than 700 U.S. stores by Dec. 31. The stores are spread throughout 28 states, including multiple locations in areas like Phoenix and Atlanta. It is laying off about 17 percent of its domestic work force, which could affect up to 7,300 people.

The company also said last week that it will further cut back on new store openings and planned to work with landlords to renegotiate leases, lower rent or terminate agreements while it dealt with tightening credit from its vendors.

Circuit City posted a wider second-quarter loss in September with a 13 percent decline in sales at stores open at least a year. The company has been under new leadership since late September when Chief Executive Philip J. Schoonover agreed to step down. He was replaced by James A. Marcum, who is now vice chairman and acting president and chief executive.

Shares in Circuit City have traded under $1 for more than a month and the company received a warning about that last month from the New York Stock Exchange.