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Nov. 10 (Bloomberg) -- Circuit City Stores Inc. filed for bankruptcy amid rising competition from Best Buy Co., Wal-Mart Stores Inc. and online electronics retailers.
The petition for Chapter 11 protection in U.S. Bankruptcy Court in Richmond, Virginia, listed $3.4 billion in assets and $2.32 billion in liabilities, driving the shares down 56 percent before the New York Stock Exchange halted trading. The company said it is entering court protection owing Hewlett-Packard Co. $119 million and Samsung Electronics Co. $116 million.
The Richmond-based company, founded in 1949 when Samuel Wurtzel opened the city's first retail television store, has lost more than $5 billion in stock-market value in two years. Circuit City plans to stay in business while it comes up with a plan to restructure.
``It's very incongruent for retailers to file bankruptcy before Christmas,'' Burt Flickinger, managing director of consultant Strategic Resource Group in New York, said in a Bloomberg Television interview. ``You're gong to see a record number of retailer bankruptcies and closings.''
Concerns among vendors that Circuit City wouldn't be able to pay for the merchandise it sells ``escalated considerably'' in the past week, the company said in the filing.
The chain, with 721 stores in the U.S. and 770 in Canada, has said competition hurt sales, especially at older locations in lower-income neighborhoods. Amazon.com Inc. and other Web-based retailers of computers, televisions and music also have lured customers away.
Circuit City fell 14 cents to 11 cents at 9:30 a.m. before the start of trading on the New York Stock Exchange. The NYSE halted buying and selling of the shares after the stock's early plunge.
On Nov. 3, the company said it would close a fifth of its U.S. stores and renegotiate leases on some locations to conserve cash. The closings will leave it with about 566 U.S. stores and trim about 20 percent of the 43,000-strong workforce. Circuit City also said today it cut 700 jobs in its regional and district store support department.
Circuit City said it owes about $650 million to suppliers, with electronics manufacturers Sony Corp., Zenith Corp., Toshiba Corp., Garmin Ltd. and Nikon Inc. among the creditors.
Circuit City tried to sell itself in May after Blockbuster Inc. made a preliminary offer that was later withdrawn. The retailer fired higher-paid workers and opened smaller stores to cut costs. Until the shift, the company's strategy had been to sell in locations as large as 44,000 square feet (4,090 square meters), which it calls ``superstores.''
Well, I guess that leaves Best Buy with no major electronics competitor as big as Circuit City.
Nov. 10 (Bloomberg) -- Circuit City Stores Inc. filed for bankruptcy amid rising competition from Best Buy Co., Wal-Mart Stores Inc. and online electronics retailers.
The petition for Chapter 11 protection in U.S. Bankruptcy Court in Richmond, Virginia, listed $3.4 billion in assets and $2.32 billion in liabilities, driving the shares down 56 percent before the New York Stock Exchange halted trading. The company said it is entering court protection owing Hewlett-Packard Co. $119 million and Samsung Electronics Co. $116 million.
The Richmond-based company, founded in 1949 when Samuel Wurtzel opened the city's first retail television store, has lost more than $5 billion in stock-market value in two years. Circuit City plans to stay in business while it comes up with a plan to restructure.
``It's very incongruent for retailers to file bankruptcy before Christmas,'' Burt Flickinger, managing director of consultant Strategic Resource Group in New York, said in a Bloomberg Television interview. ``You're gong to see a record number of retailer bankruptcies and closings.''
Concerns among vendors that Circuit City wouldn't be able to pay for the merchandise it sells ``escalated considerably'' in the past week, the company said in the filing.
The chain, with 721 stores in the U.S. and 770 in Canada, has said competition hurt sales, especially at older locations in lower-income neighborhoods. Amazon.com Inc. and other Web-based retailers of computers, televisions and music also have lured customers away.
Circuit City fell 14 cents to 11 cents at 9:30 a.m. before the start of trading on the New York Stock Exchange. The NYSE halted buying and selling of the shares after the stock's early plunge.
On Nov. 3, the company said it would close a fifth of its U.S. stores and renegotiate leases on some locations to conserve cash. The closings will leave it with about 566 U.S. stores and trim about 20 percent of the 43,000-strong workforce. Circuit City also said today it cut 700 jobs in its regional and district store support department.
Circuit City said it owes about $650 million to suppliers, with electronics manufacturers Sony Corp., Zenith Corp., Toshiba Corp., Garmin Ltd. and Nikon Inc. among the creditors.
Circuit City tried to sell itself in May after Blockbuster Inc. made a preliminary offer that was later withdrawn. The retailer fired higher-paid workers and opened smaller stores to cut costs. Until the shift, the company's strategy had been to sell in locations as large as 44,000 square feet (4,090 square meters), which it calls ``superstores.''
Well, I guess that leaves Best Buy with no major electronics competitor as big as Circuit City.
