Big-box technology retailer Circuit City is asking for court approval to liquidate after two failed attempts at acquisition. The Richmond, Va.-based company said Friday that it plans to close its remaining 567 stores in the United States.
The move comes after the company filed a motion with the U.S. Bankruptcy Court to put the company up for sale and separate business units and inventory. Circuit City was in talks with "two highly motivated and interested parties" that were considering providing Circuit City with additional financing to keep the company afloat, but negotiations fell through.
"We are extremely disappointed by this outcome," said James Marcum, vice chairman and acting president and chief executive at Circuit City Stores. "The company had been in continuous negotiations regarding a going-concern transaction. Regrettably, for more than 30,000 employees [34,000 in total] 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 time frame available, and so this is the only possible path for our company."
Circuit City's Firedog repair service and 700-plus Canadian retail and outlet stores may be next on the chopping block, but for now executives say the Canadian operations, which have 3,000 employees, will not be affected by the liquidation.
Circuit City's financial troubles began in mid-2008 when Blockbuster decided against acquiring it for a reported $1 billion. Things worsened when the poor economy led vendors to impose restrictions on payment terms and credit for the company. Vendors began asking for payment before products were shipped.
Financial troubles continued in November when the company was forced to close 155 stores in the U.S., scrap plans to open 10 new stores in 2009, and make massive job cuts. Of the company's 46,000 employees worldwide, 17 percent were let go in early November. Shortly after, the company filed for bankruptcy protection.
But executives at Circuit City remained positive and thought they could keep the company going through the holidays and beyond. Sales improved significantly in the last two weeks of December, according to the company, and a focus on the company's gross margin allowed it to continue operations under budget.
Liquidators will begin the process at the 567 stores over the weekend; closing sales will start on Saturday, Jan. 17, and are expected to last until the end of March. In Richmond, most employees will be cut, while a skeleton staff will remain and work through the liquidation process.
A list of store closings is available on Circuit City's Web site. Everything from televisions to computers is expected to be on clearance. The company, however, would not disclose specific discounts.
Customers can access the Web site and customer-service call centers through Jan. 18.