Posted on 10/20/2008 8:56:33 AM PDT by Rebelbase
CHICAGO (AP) - Shares of beleaguered electronics retailer Circuit City Stores Inc. rose Monday after a report said the chain may close at least 20 percent of its stores to shore up its finances and avoid filing for bankruptcy protection.
Citing "several people familiar with the matter," The Wall Street Journal said the nation's second-largest consumer electronics chain was considering closing at least 150 locations and slashing thousands of jobs to avert a Chapter 11 filing. Circuit City operates stores in Greensboro, High Point and Winston-Salem.
Closing dozens of stores would allow the retailer to liquidate $350 million in inventory that could be used to pay real-estate costs, including leases on abandoned sites.
The company said it had no immediate comment about the report Monday morning.
But investors appeared pleased by the prospect, sending the company's shares up more than 20 percent in morning trading before they eased back slightly and providing a small gain for the stock that's lost more than 90 percent of its value this year.
Circuit City shares rose 6 cents, or 15 percent, to 45 cents in morning trading Monday.
Standard & Poor's analyst Michael Souers said he was maintaining his "Hold" rating on the retailer, but slashed his price target in half to $1.
"While we would applaud (Circuit City) for its attempt to stay solvent, we remain highly pessimistic on holiday sales, and on consumer spending in 2009," he wrote in a research note to investors, adding that he was maintaining his projections that the company would lose $2.65 per share in 2009 and $2.48 per share in 2010.
The Richmond, Va.-based company, which is in the midst of a comprehensive review as it works to operate as a standalone business while exploring strategic alternatives, has had only one profitable quarter in the past year. It posted a wider second-quarter loss last month with a 13.3 percent decline in same-store sales.
The results came after Circuit City replaced its chief executive and withdrew its outlook for the full year because of traffic declines, stronger competition and a weak brand.
In May, Goldman Sachs & Co. was hired to help the retailer explore strategic options amid a now-withdrawn $1 billion takeover bid from Blockbuster Inc.
The Journal reported that Circuit City hired Skadden, Arps, Slate, Meagher & Flom LLP as its bankruptcy counsel earlier this month, citing unidentified people familiar with the matter. The newspaper also said the company hired FTI Consulting Inc. to develop a turnaround plan and has retained investment bank Rothschild Inc. to lead discussions with banks and acquire emergency financing.
LLS
Their online site is pretty nice. Maybe they should close all the stores.
You mean I’ll have to go elsewhere to buy my made in China crap? Bummer.
After my CC fired all the cute girls, I stopped going.
I try to patronize the one near me as - competition is vital in keeping Best Buy from abusing their near-monopoly.
In the last year or so CC has been like walking into a morgue. They have given up on moving inventory around or trying the most basic and obvious retail techniques to attract shopper interest.
It’s a shame because I always get better service there than I do from our blueshirt friends at Best Buy.
“I thought the best employees were fired.”
We used to look forward to our monthly shopping spree at Circuit City. After they got rid of the best salesmen - we have not bought a thing from them. eBay & Craigslist rule!
Going into a Circuit City is liking walking into a basement full of rats with a cheese suit on. The salesmen are all over you.
“Going into a Circuit City is liking walking into a basement full of rats with a cheese suit on. The salesmen are all over you.”
Try an HH Gregg. Those are a hundred times worse in that regard.
Yep, people complained about aggressive salesman while they were on commission, but at least you got service!
A couple of years ago Circuit City laid off (ie fired) their senior/higer paid employess and replaced them with newer/lower paid employees.
This is a company where you climb the ladder, and once you get too high (and too highly paid) they get rid of you. Don’t feel sorry for them (but I do for the employees.)
I understand HH Greg is 100% commission, no base salary.
That’s why those of us who like to haggle prefer PC Richard here in New York over Worst Buy. The ‘Nillas who move to NYC from the hinterlands may love to pay retail. I don’t.
Never been inside an HHGregg, but their prices are higher in Raleigh than BestBuy or Circuit City.
Yeah, CC and BB do NOT haggle. I saw it happen a couple of times at the CC Express (mall-based version) I worked at, but it was rare. At the big stores...I don’t think I ever saw it.
I have always had good experiences at CC. If they close, I will miss them.
Is. I went in there once. Last time ever. I went in to buy batteries. They had me fill out about eight hundred forms to attribute the buy to the right person, etc. It took me ten minutes to check out because the salesman didn’t even know the procedures himself they were so complicated. For batterie.s
It was FW Woolworth who started the practice of charging the same retail price sans haggling, supposedly to attract more female shoppers. Its been downhill ever since for those of us wannabe Syrians.
I know the Wichita CC used to be pretty good, but it since took a dive before we moved. Pretty crappy service and a confusing layout.
For a second there, I thought you were talking about Best Buy—they’re pretty much the same. Overpriced, crappy employees pushing worthless “extended warranties”.
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