Circuit City Stores Inc., suffering from declining sales, traffic and cash, said Monday that it's shutting 155 U.S. underperforming stores in a last-ditch efforts to stay afloat before what some analysts predict may be an unavoidable bankruptcy...This is bad for consumers. One less choice in the marketplace, Best Buy or Walmart is not a choice. Walmart sells the cheapest goods with zero customer service, and Best Buy typically sells expensive goods with poor customer service and purchase terms.
Circuit City had been hurt by having stores in less-favorable locations than those of Best Buy Co.; by increased competition from the likes of Wal-Mart Stores Inc.; and by an earlier move to lay off higher-paid staff who were able to push more profitable sales, according to industry observers...
Declining consumer confidence and a significantly weakened retail environment have hurt Circuit City's sales and gross profit-margin rate more than it had anticipated, the company indicated.
Some of Circuit City's vendors, which also are facing tightened credit terms from their lenders, are asking for payment before they ship products and have limited the credit available for purchases -- including not giving the company the customary increases in credit line for holiday purchases.That tightening in terms and credit availability is becoming "unmanageable," Circuit City said...
In addition to store closings, Circuit City said that it's reducing future store openings and renegotiating leases to help preserve cash after its liquidity deteriorated and vendors tightened payment terms for the electronics retailer.The closings will result in a reduction of about 7,300, or about 17% in the company's U.S. workforce, Richmond, Va.-based Circuit City said.
More out of work workers from these store closings will only further hurt our already struggling economy, not something we can afford as we move into the holiday season...which will be a make it or break it time for many retailers this year.
For our little part of the country the Tri-State area of NJ, DE, and PA only a few closings are on tap: Freehold and Livingston New Jersey. To view the entire store closing list, click here.