Retailers, consumers and prices
Citing severe liquidity issues and tighter credit conditions from its vendors, the electronics retailer said it would close 155 stores by election day. Store closing sales begin on Nov. 5, the company said. Circuit City, the No. 2 electronics retailer, also said it would exit 12 markets in the United States as part of its plan.
Circuit City has about 1,500 stores in the United States and Canada.
The announcement follows a prolonged earnings and sales slump for Circuit City, which had said earlier that it would consider all options including shutting some stores to reverse its fortunes. Last week, the company received a notice from the New York Stock Exchange that it does not comply with the exchange’s stock-price standard. Its shares were trading at less than 50 cents on Monday.
The store closures could present an opportunity to rival Best Buy, whose President and Chief Operating Officer Brian Dunn said last week that it would look to grab some stores closed by distressed competitors.
To be sure, however, Dunn had said “if Circuit City did go out, I would not be jumping up and down.”
Check Out Circuit City posting its fifth quarterly loss for the past six quarters and withdrawing its financial outlook, as declining store traffic put a damper on sales right before the key holiday season.
Circuit City, which competes with Best Buy, has been the subject of takeover speculation and other questions about its future as results weaken, hurt by consumers dialing back on nonessential spending amid high food and gas prices and tight credit markets.
Retailer Circuit City Stores is expecting digital imaging products to drive sales this Mother’s Day, and is planning to offer consumer training in the use of such items.
The retailer said a U.S. survey it commissioned of more than 4,000 mothers showed that nearly 38 percent would opt for a digital camera, camcorder or photo frame as a gift.
Check out the tiny profit at Circuit City.
The electronics retailer surprised investors by not posting a loss in the fourth quarter. The company had a $4.85 million profit, even though sales fell 7.7 percent.
Faced with a push by investor Mark Wattles to oust chief executive Philip Schoonover (pictured), the company is trying to simplify store operating procedures and sell more add-on services like home theater installations and warranties.
But the company is still facing what it calls the worst macroeconomic environment in years. And now that it has completed a store overhaul, the company needs to show it can improve customer service before Circuit City can show some juice.
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