Tag Archives: Circuit City

Circuit City Finally Bites The Dust

The news shouldn’t surprise anybody, certainly not readers of this blog.

Richmond, Virginia based Circuit City stores announced today their intention to close their 567 remaining stores and liquidate their inventory.  We predicted that they wouldn’t last much past the end of the 2008 Christmas season.

That means another 34,000 American workers joining the unemployment line.

See our previous posts…

Circuit City Stores Files For Chapter 11 Bankruptcy Protection

One Foot In The Grave At Circuit City

Philip Schoonover Learns That What Goes Around Comes Around

– Routing By Rumor

Advertisements

Leave a comment

Filed under Blogging, Business, CompUSA, Consumerism, Employment, Jobs, Labor, Money, News, Retail, Retailers, Routing by Rumor, Shopping, Stock Markets, The Economy, Walmart

Bloomberg Hits The Nail On The Head Regarding Economic Stimulus Plan

NYC mayor Michael R. Bloomberg

NYC mayor Michael R. Bloomberg

There was a piece on the radio this morning which discussed New York City Mayor Michael Bloomberg‘s comments about any future economic stimulus plans. Unfortunately, our searches for his comments have come up empty, but we’re guessing that he made these remarks yesterday. If we’ve misquoted Mr. Bloomberg, our apologies. We are going on our recollection of what we heard on the radio this morning.

Mr. Bloomberg (his middle name is “Rubens” – how many of you knew that?) said that the first round of economic stimulus checks the government mailed out amounted to a program that allowed Americans to go buy Chinese-made widescreen TVs at Circuit City. We couldn’t agree more. In fact, if you’ve followed RoutingByRumor, you know that we have said that the first round of economic stimulus checks amounted to little more than a subsidy for Middle East Oil producing countries, big oil and China, Inc. (You can rest assured that no matter how low the price of oil goes, no matter how much demand drops, that ExxonMobil will continue to post record profits in the quarters and years ahead.)

Franklin Delano Roosevelt

Franklin Delano Roosevelt

Mr. Bloomberg said that any future economic stimulus program should fund infrastructure projects, which would be similar to what the United States undertook to help lift the country out of The Great Depression. President Franklin Delano Roosevelt‘s Works Progress Administration (WPA) created almost eight million jobs between 1935 and 1943. Just as importantly, this New Deal agency built highways, bridges, schools and other public works projects across America that still serve our nation today. New York City has more than it’s share of crumbling infrastructure, and like other American cities, would benefit greatly from a modern-day WPA.

Mr. Bloomberg has been critical of the Federal government’s economic stimulus plan in the past. In fact, he’s been against it all along. Last February, he said the then-proposed first round of economic stimulus checks were “like giving a drink to an alcoholic”.

Athough not in relation to the current debate on future economic stimulus spending, Mr. Bloomberg appeared before lawmakers on Capitol Hill this past June, in his capacity as co-chair of Building America’s Future.   He gave this testimony about the need to invest in infrastructure projects.

At a time when there’s more layoffs in the news every day, and the scope of those job cuts are getting wider and wider (today’s news brought word of Citibank planning 10,000 job cuts worldwide), we desperately need a government program that will give American families more than fleeting relief. We need a program that will keep the economic stimulus money the government spends here at home, instead of it being an indirect subsidy for China, which doesn’t benefit American families one bit. Walmart is doing very well, thanks to American families desperate to stretch their income. There is no need to provide Americans with stimulus checks they can take to Walmart, to buy more Chinese made goods. We’ve read that something on the order of 80% of the goods on the shelves at Walmart are made in China.

There’s slim chance that outgoing President George W. Bush will try to implement a program that will put Americans to work while also rebuilding America’s infrastructure. Our hope is that President-elect Barack Obama will seize the opportunity to lift America out of hard times by proposing a program styled on Roosevelt’s WPA. If Washington is going to spend billions of more dollars in an attempt to prevent an economic collapse, doesn’t it make sense to spend it on projects that will benefit America for generations to come, while keeping our money here at home ?

– Routing By Rumor

Leave a comment

Filed under Business, China, Consumerism, Employment, Environment, Jobs, Labor, Money, New York City, News, Politics, Routing by Rumor, The Economy, Uncategorized, World War II, Your Money

Circuit City Stores Files For Chapter 11 Bankruptcy Protection

This morning, Circuit City filed a bankruptcy petition (see bloomberg.com article), In Re Circuit City Stores Inc., 08-35653, with the U.S. Bankruptcy Court for the Eastern District of Virginia. If you’ve been following this blog, you won’t be surprised by today’s filing. Circuit City has had one foot in the grave for a while now (see our article from last week). See additional coverage of this story by Forbes, The Associated Press, The New York Times, Barron’s and Reuters.

The Richmond Times-Dispatch reported that last Friday, up to 800 employees at Circuit City’s corporate headquarters (more than a third of the workers there) received pink slips.

Circuit City owes well over half a billion dollars to suppliers including Hewlett-Packard, Samsung, Sony, Zenith, Toshiba, Garmin and Nikon. With bankruptcy looming, more and more vendors have refused to extend credit to Circuit City. With today’s filing, we’re pretty sure their ability to obtain terms from vendors is now pretty much non-existent. It probably also ensures that the New York Stock Exchange will de-list Circuit City, as they have already warned, if their share price doesn’t make a sustained recovery to above $1.00 a share. In early trading today, Circuit City shares have lost more than 90% of their value, falling from a lofty $0.12 per share when the market opened, and now sitting at an embarrassing two pennies a share (but that’s at least twice as much as we think its worth, so you could say its overvalued).

11/11/2008 Update…

Well, that didn’t take long. The latest milestone on the devolution of Circuit City has occured. Circuit City shares have been delisted from the New York Stock Exchange (NYSE), and are now trading on the Pink Sheets.  With all these pink slips and pink sheets, maybe pink is Circuit City’s new color.  Circuit City is now what is referred to as a “penny stock”. That light you see at the end of the tunnel just may be the oncoming Best Buy Express. Click here to get a quote on Circuit City shares (CCTYQ.PK)

Things have gone steadily downhill for Circuit City since they made the absolutely brilliant business decision in March of last year, to fire 3,400 of their most experienced employees. Consumerist.com has posted
this excellent timeline of Circuit City’s decline, titled “How Circuit City Came Undone”, which shows their declining stock price in relation to various events in their demise. The graph looks a lot like a ski slope. It’s the sort of thing they’ll probably use in business schools, when teaching a course in how to destroy a successful company.

Perhaps the saddest part of this modern day Greek tragedy is the fact that the executives who were the architects of this debacle earned millions of dollars for their role in the company’s failure. Perhaps the new scrutiny that the country’s economic meltdown is focusing on executive compensation will cause the directors of corporations to hold their executives responsible for the bad decisions they make. Here’s a suggestion… Instead of simply lavishing millions of dollars in company stock on executives, how about adding the condition that they won’t be vested unless there is a certain number of quarters of future growth. For instance, Mr. CEO, that five or ten million dollars worth of company stock won’t be yours unless the company makes money over the next two years. No more “take the money and run”. For too many corporate executives, it has been a game of “heads I win, tails I win”.

Given Circuit City’s history and reputation, the decrepit state of the U.S. economy, and the competition that exists in the consumer electronics space (especially from competitors Best Buy and Walmart), we think it’s a safe bet that Circuit City will never emerge from bankruptcy, and that’s, as Martha Stewart would say, “a good thing”. Last week, they announced the closing of many of their stores, and we wouldn’t bee surprised if more closings follow before the end of the year.

Coming at the beginning of the holiday shopping season, the closings and the bankruptcy filing might attract some bargain hunters, but let’s be honest… Who wants to make a major purchase from a retailer who may very well not be around, should you need to return an unwanted or defective purchase. It pretty much goes without saying that anything purchased at a going-out-of-business sale is sold as-is, no returns, no refunds. Caveat emptor.

We’re going to go out on a limb here, and make the following prediction; Circuit City’s Chapter 11 bankruptcy will become a Chapter 7 filing (liquidation) within six months, perhaps much sooner. Check back here to see how our prediction fares.

– Routing By Rumor

3 Comments

Filed under Blogging, Business, Consumerism, Employment, Hewlett-Packard, Jobs, Labor, Money, News, Retail, Retailers, Routing by Rumor, Shopping, Stock Markets, Technology, The Economy, Walmart, Your Money

Circuit City Stores Soon To Slip The Surly Bonds Of Earth

High Flight

Oh! I have slipped the surly bonds of Earth
And danced the skies on laughter-silvered wings;
Sunward I’ve climbed and joined the tumbling mirth of sun-split clouds, – and done a hundred things
You have not dreamed of wheeled and soared and swung
High in the sunlit silence. Hov’ring there,
I’ve chased the shouting wind along, and flung
My eager craft through footless falls of air…
Up, up the long, delirious, burning blue
I’ve topped the wind-swept heights with easy grace
Where never lark, nor eer eagle flew –
And, while with silent lifting mind I’ve trod
The high, untrespassed sanctity of space,
Put out my hand and touched the face of God.

– John Gillespie Magee, R.C.A.F

(circa 1941)

Now that we’ve set the mood, we regret to inform you that reports of Circuit City’s demise have been greatly exaggerated. They are still afloat, albeit pretty much dead-in-the-water. Even the rats have been seen abandoning ship. See our previous posts here and here, about the darling of the electronics retailing world.

Management at Circuit City is bailing water, but their ship is sinking. Amazingly, there are many people with a stake in Circuit City (such as the shareholders) who actually believe they can convince a potential suitor that the schooner Schoonover has some market value left (see “A (Fire) Sale For Circuit City?” – Business Week, June 24, 2008).

We think they should scuttle the ship.

Who in their right mind would pay a dime for Circuit City? In our opinion, the only value that remains is the inventory on their shelves. Circuit City is drowning in a sea of red ink (we couldn’t resist one final nautical reference). Same store sales were down 12% for the latest quarter, compared to a year ago, and they lost another $165 million. A liquidation sale would be the best and fastest solution to recoup at least some shareholder value.

We’re amazed Circuit City Stores haven’t had the opportunity yet, but they should be able to “touch the face of God” anytime now.

– Routing By Rumor

1 Comment

Filed under Business, Consumerism, Employment, Jobs, Labor, Money, Retail, Retailers, Routing by Rumor, Shopping, Stock Markets, The Economy, Your Money

What Are They Smoking Over At Blockbuster, Inc.? (2)

…because whatever it is, I want some.

Previously, we wrote about how Circuit City Stores, Inc. was basically, a dead company walking. We believe that the management of Circuit City irreparably damaged their company and their brand, by their really, really dumb decisions. Not only were they terrible choices from a business perspective, but they also proved that the company lacked a conscience and a soul. Circuit City sealed their own fate just over a year ago. We wrote that we would never again set foot in a Circuit City store, and that vow applies regardless of who buys the company, or what they might rename it. We think the American public feels the same way about Circuit City. They’re done.

Article continued here.

Leave a comment

Filed under Routing by Rumor

The Rise And Fall Of Circuit City Stores

Another one bites the dust ?

Well, we don’t want to bury the dearly departed before they take their last breath, so let’s just say “Another One Looks Like They’re About To Bite The Dust”. I’m hearing that song from “Queen” more and more often lately. I think you can say a trend is developing.

Based on news reports over the past year, and a syndicated Associated Press column I just read about Circuit City, it looks to us like the end is near. The health of the U.S. electronics retailer “Circuit City” has been in a precipitous decline, and the patient is being wheeled into the ICU. Unfortunately, just like Circuit City, the hospital they’re in fired most of their experienced employees, and replaced them with people earning little more than minimum wage. Talk about poetic justice. Patient care took a dive, but hey, look at all the money they’re saving. Smart. Real smart. Now, the vultures are circling, and it looks like they’ll be calling in the Tibetan monks, to conduct a “sky burial” pretty soon (also see Sky Burial on Wikipedia or this NY Times article on the subject). What a pity. First Computer City, then CompUSA, now Circuit City.

The beginning of the end for Circuit City, in our opinion, was in March of last year, when Circuit City’s CEO, Philip J. Schoonover, decided to fire almost 3,500 experienced employees immediately, and replace them with employees earning little more than minimum wage. This is “employment at will” at it’s very best. No advance notice. No buyouts. No severence. No decency. It’s little wonder that most employees these days, especially in the retail sector, have no dedication or loyalty. It’s every man for themselves.

Sadly, I doubt there is much of anything that the management of Circuit City can do to mitigate the damage done to it’s reputation, either in the eyes of their former customers, or in the eyes of their former and current employees. If I was one of the 3,500 employees who were summarily dismissed in favor of cheaper help, I wouldn’t return to Circuit City under any circumstances. To paraphrase the usual wisdom, fire me once, shame on you; if I give you the chance to fire me twice, shame on me.

I was a customer of Circuit City. I could usually find very knowledgeable employees there to help me make purchasing decisions. When I heard what they had done to their most experienced sales people, I vowed that I would never again set foot in a Circuit City store. I have kept that promise.  RIP.  Hasta la vista.  Good riddance.

riddance

noun

  1. The act of getting rid of something useless or used up: disposal, dumping, elimination, jettison. See “Circuit City”.

  1. The act or process of eliminating: clearance, elimination, eradication, liquidation, purge, removal. See “Circuit City”.

Our decision to never again be a Circuit City customer was not so much a result of our concern that they no longer have experienced salespeople. Rather, we were disgusted by the fact that a company we had patronized would do this to their employees. Apparently, many other former Circuit City customers feel the same way we do. Since their decision to fire their most experienced and knowledgeable employees, their sales have dropped substantially. And in the 10 months since Circuit City (NYSE: CC) made this incredibly smart decision, their stock price has plummeted from $22.00 a share to $3.50 a share, an almost 85% loss in value. Their stockholders must be so pleased. In comparison, during this same time period, the major stock indices (Dow Jones, NASDAQ, and the S&P 500) have remained flat, which while not great, is a lot better than shares of Circuit City have done.

Interestingly, Mr. Schoonover came to Circuit City from competitor Best Buy, four years ago, and in two years time he was promoted to CEO. No doubt he and Circuit City’s Board feel he is doing a great job. However, from where we are sitting, it looks like he has done more for Best Buy’s bottom line than for Circuit City’s, since becoming CEO.

For the fiscal year ended February, 2007, Mr. Schoonover received total compensation valued at nearly $7 million. We find that incredible. The 3,500 Circuit City employees who lost their jobs in March probably think that was about $7 million too much. Mr. Schoonover no doubt believes his decisions have been in the best interest of the company and it’s stockholders. RoutingByRumor asks this question; Could the decisions made by the management of Circuit City over the past year have been any worse?

How does the ship’s Captain rationalize it when he is being richly rewarded at the same time his crew is made to “walk the plank”? Mr. Schoonover’s ship has hit the rocks and it’s sinking fast. Will he follow maritime tradition, and go down with his ship, or will he jump ship? Or will the Board of Directors of Circuit City have him follow in the footsteps of his employees by walking the plank?

Aye, Matey. All ashore that’s going ashore.

– RoutingByRumor

1 Comment

Filed under Consumerism, Employment, Life, Money, News, Retail, Routing by Rumor, Shopping, Your Money