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30,000 Jobs Lost!

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The culmination of one operating blunder after another has led to the ultimate fall from grace for the 2nd largest electronic retailer in North America.

Circuit City announced today that it will liquidate its remaining 567 U.S. stores after failing to locate a buyer or a getting an extension on its DIP loan.

The company had three options available:

1. Find a buyer: It was reported the Mexican Tycoon Ricardo Pliego Salianas, who recently purchased a 28% stake in the company as a potential suitor. Others named in acquiring the trouble electronic retailer was Golden Gate Capital and a joint bid by liquidation firms, Hilco Merchant Resources and Gordon Brothers Retail Partners.

2. Acquire additional financing to keep its doors open.

3. Get an extension on its DIP loan.

With 2.3 billion dollars in debt, Circuit City had very little choice but to liquidate its remaining stores if one of the above conditions weren’t met.

“We are extremely disappointed by this outcome,” James Marcum, acting CEO for Circuit City, said in a statement. “Regrettably for more than 30,000 employees of Circuit City  and our loyal customers, 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 path for our company.”

The company’s demise can be traced to Executive mismanagement, outdated inventory, and its inability to compete with its chief rival, Best Buy and other local electronic retailers.

This latest news comes as no surprise for the Richmond, Va. based company whose stock has languished below ten-cents for several months and was delisted on the New York Stock Exchange.

It would seem that Circuit City had built up ill will over the years with consumers as well as its own workforce. The consensus from most of the people that I have spoken to:

Circuit City has been insignificant and going out of business for years. The only ones that didn’t seem to see the writing on the wall was upper management.

The company’s decision to displace knowledgeable high paid associates for inexperienced low paid employees may have hasten its demise.

Perhaps one of Circuit City’s workers summed it up best:

“Board this place up—stick a fork in them, they’re done!”

Bradley Booth/Freelance Commercial Writer/Author

 

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