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Retailers, consumers and prices

Check Out Line: Circuit City circled by suitors

January 9, 2009

Check Out Circuit City in deal talks.CIRCUITCITY/

The bankrupt electronics chain is negotiating with two undisclosed parties that could either buy the company or provide it with additional financing.  The company said the parties are considering providing it with financing to allow it to sustain its operations and restructure through a stand-alone plan, and/or buying the company outright.

Naturally, eyes will turn south toward Ricardo Salinas Pliego. The Mexican retail and media tycoon said in November that he owned 28 percent of Circuit City shares and indicated that he might seek control of the chain, which buckled under the pressure of declining consumer spending and increasing competition by the likes of Wal-Mart and Best Buy. It filed for Chapter 11 bankruptcy protection in November.

Circuit City received a takeover offer from Blockbuster Inc last year, but the movie-rental company later withdrew it and Circuit City was again on its own.

Consumer electronics sales have suffered mightily this year, as a year-long recession has led to consumers to seek out bargains on big-ticket gadgets or forego them altogether. Best Buy, the country’s top specialty electronics chain, narrowed its full-year profit forecast on Friday after posting a 6.5 percent drop in December same-store sales.  

And with a government report on Friday showing that U.S. unemployment has hit its highest level in almost 16 years, those TVs, GPS devices and computers are likely to be tough sells for some time.

 Also in the basket:

Tesco, DSG eyed as two-tier UK Christmas unfolds

Wal-Mart stumble shows rivals putting up a fight

Gottschalks Looks to Avoid Bankruptcy (WWD)

General Mills December sales up

(Photo: Reuters)

Comments

Not confidence inspiring – Wattles said in June 08 that “I am very confident that we will be seeing who the buyer of Circuit City is in the next three or four weeks and what the price is,” Mark Wattles told Reuters by phone…

http://www.reuters.com/article/innovatio nNews/idUSN2437386620080624

Posted by Jim Salins | Report as abusive
 

This is business. If Circuit City could not stay competative with other similar businesses, such as Wal-Mart and Best Buy, then they should have prepared for this already. Too often people will put their blinders on and not own up to harsh realities. If they were unwilling to make the changes the market was requiring then they shouldn’t be suprised at the state they are in.

Posted by David | Report as abusive
 

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