CircuitCity has decided to close stores in Baton Rouge, the New Orleans area such as in Jefferson Parish, St. Tammany Parish and Marrero Louisiana as part of a nationwide restructuring.
The stores scheduled to close this week are:
3511 BATON ROUGE 8640 AIRLINE HIGHWAY BATON ROUGE LA 70815
3507 VETERANS 2421 VETERANS MEMORIAL BV KENNER LA 70062
3506 WEST BANK 4945 LAPALCO BLVD MARRERO LA 70072
3552 SLIDELL61119 AIRPORT RDSLIDELL LA 70460
The closings are part of a liquidity and cost reduction review considering the “macroeconomic environment”.
Below is the news release of CircuitCity.
Circuit City Stores, Inc. Provides Update on Liquidity and Announces Store Closing Plan
-- Company Plans to Close 155 Stores, Further Reduce New Store Openings and Renegotiate Certain Leases --
-- Company Announces Ongoing Evaluation of Additional Cost Reduction Initiatives and Is Considering All Options and Alternatives to Restructure its Business --
RICHMOND, Va., Nov 03, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Circuit City Stores, Inc. (NYSE: CC) today provided an update on its liquidity position and its previously announced ongoing comprehensive business review. Due in part to its deteriorating liquidity position and the continued weak macroeconomic environment, the company has decided to take certain restructuring actions immediately, including closing 155 domestic segment stores, reducing future store openings and aggressively renegotiating certain leases. The company also is considering all available options and alternatives to restructure its business.
Business and Liquidity Update
Over the past several weeks, a number of factors have impacted severely the company's liquidity position. These factors include the following:
-- Waning consumer confidence and a significantly weakened retail environment have impacted negatively the company's sales and gross profit margin rate to a greater degree than management had anticipated previously.
-- Following the company's second quarter results announcement, the company's liquidity position and the sharply worsened overall economic environment led some of CircuitCity's vendors to take restrictive actions with respect to payment terms and the credit they make available to the company. Additionally, the recent disruption in the financial markets has contributed to certain of the company's vendors experiencing insurmountable challenges with obtaining credit insurance for the company's purchases. As a result of this and other considerations, certain of the company's vendors have set more restrictive payment terms than in previous quarters, including in some cases requiring payment before shipment. Vendors also have limited the credit available to the company for purchases, including in some cases not providing customary increases in credit lines for holiday purchases. While management is working diligently to secure the support of its vendors and believes it has maintained good relationships with these important partners, the current mix of terms and credit availability is becoming unmanageable for the company.
-- To date, the company has been unable to collect an income tax refund of approximately $80 million that the company believes it is owed from the federal government.
-- Due primarily to the weakened economic environment and its potential impact on the timing of sales of the company's inventory and costs and expenses associated with such sales, a recent third-party appraisal conducted for the company's asset-based credit facility resulted in a reduction of the estimated net orderly liquidation value of the company's inventory. This valuation adjustment was made despite the mix of merchandise remaining consistent with the previous appraisal in November 2007. This reduction has led to a lower borrowing base and reduced availability for the current period compared with what the company had expected previously.
James A. Marcum, vice chairman and acting president and chief executive officer of Circuit City Stores, Inc. said, "Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply. The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors. The combination of these trends has strained severely our working capital and liquidity, and so we are making a number of difficult, but necessary, decisions to address the company's financial situation as quickly as possible."
Domestic Segment Real Estate Actions
As a result of the company's ongoing asset productivity assessment and working capital situation, the company has determined to take the following initial actions with respect to its domestic segment real estate portfolio and strategy:
-- Close 155 stores and exit certain markets: CircuitCity plans to close 155 stores that are underperforming or are no longer a strategic fit for the company. The stores identified for closure are located in 55 U.S. media markets, of which CircuitCity will exit 12 U.S. media markets.
The company expects that impacted stores will not open on Tuesday, November 4, and the store closing sales will begin on Wednesday, November 5. The company expects the sales to be completed no later than calendar year end.
For fiscal 2008, the stores that are being closed generated in total approximately $1.4 billion in net sales. When results were viewed at the individual comparable store level, the closing stores, as compared to the stores remaining open, on average had lower net sales, a lower close rate and a lower gross profit margin rate. The stores, on average, were also unprofitable when marketing expenses were allocated to the individual store-level results.
Circuit City will continue to honor its customer commitments and serve its guests through 566 stores in 153 U.S. media markets, via its Web site at www.circuitcity.com and via phone at 1-800-THE-CITY (1-800-843-2489). During this transitional period, CircuitCity is executing a plan to minimize disruption to the operations of stores that are remaining open. No international segment stores are closing as a result of the real estate plans announced today.
-- Further reduce new store openings: The company has revised its store opening plans for the current fiscal year and will not open at least 10 locations that were previously expected to be opened. The company still expects to open up to two incremental stores during the remainder of fiscal 2009. As previously announced, other than existing commitments, management intends to suspend store openings beginning in fiscal 2010.
-- Renegotiate certain existing leases: CircuitCity intends to begin immediately renegotiating certain of its existing leases with the goal of significantly lowering rents. In some cases, the company may choose to negotiate with landlords to exit leases if rents are not reduced. The company also plans to work with landlords to terminate the leases for the stores included in today's closing announcement, as well as leases for a number of inactive locations that were closed previously and for the locations that are no longer being opened.
As a result of the store closures, CircuitCity expects to reduce store operating, payroll and marketing expenses. The store closures will result in a reduction of approximately 17 percent of the domestic segment workforce. The company also expects to incur charges in fiscal 2009 associated with the above real estate actions. The company is currently evaluating the benefits and expenses associated with these changes, which are subject to the outcome of negotiations and store closure agreements. Presentation on the financial statements is currently being evaluated for accounting treatment.
"We deeply regret the impact today's announcement will have on our associates, our guests and the communities where these stores are located. We truly are grateful to each of our associates for their many contributions to the company. We are also grateful for the loyalty and support we have received from our guests in the impacted communities. Circuit City will continue to serve guests through 566 stores in 153 U.S. media markets, via its Web site at www.circuitcity.com and via phone at 1-800-THE-CITY (1-800-843-2489)," concluded Marcum.
Evaluating All Options
As a result of unfavorable macroeconomic conditions and the company's deteriorating liquidity position, the company is considering all available options and alternatives for the business. Consistent with this evaluation, the company will continue to take appropriate actions to conserve cash, reduce expenses and improve liquidity. In addition, the company is continuing to evaluate additional near-term cost reduction initiatives that may be necessary to address its financial condition. The company is also in negotiations with its lenders and other third parties regarding various financing alternatives.
The company plans to operate its business without interruption while it engages in discussions with its lenders and works with advisors to determine the most appropriate restructuring alternatives. The company can make no assurance that the discussions will result in any agreements or transactions.
About Circuit City Stores, Inc.
Circuit City Stores, Inc. (NYSE: CC) is a leading specialty retailer of consumer electronics and related services. At October 31, the domestic segment operated 712 Superstores and 9 outlet stores in 165 U.S. media markets. At September 30, the international segment operated through 770 retail stores and dealer outlets in Canada. CircuitCity also operates Web sites at www.circuitcity.com, www.thesource.ca and www.firedog.com.
Circuit City Stores, Inc.
List of Closing Stores
November 3, 2008
Store # StoreNameStreetAddressCityState ZIP
3280 ANNISTON 704 SOUTH QUINTARD AVE ANNISTONAL 36201
829 TRUSSVILLE 3555 ROOSEVELT BLVD TRUSSVILLE AL 35235
3240 FAYETTEVILLE 744 EAST JOYCE BLVD FAYETTEVILLE AR 72703
441 AVONDALE 10140 W MCDOWELL RD AVONDALE AZ 85392
3330 CHANDLER3456 WEST CHANDLER BLVDCHANDLER AZ 85226
3580 GILBERT 2817 S MARKET ST GILBERT AZ 85295
3760 GOODYEAR 15433 WEST MCDOWELL RD GOODYEAR AZ 85338
436 MESA 1530 WEST SOUTHERN AVE MESA AZ 85202
3337 SUPERSTITION SPRINGS 1515 S POWER RD MESA AZ 85206
3362 ARROWHEAD 7645 WEST BELL RDPEORIA AZ 85382
435 PHOENIX METRO 9801 N METRO PKWY E PHOENIX AZ 85051
3341 NORTH SCOTTSDALE 7000 EAST MAYO BLVD PHOENIX AZ 85054
3426 CAMELBACK 1670 EAST CAMELBACK RD PHOENIX AZ 85016
3558 HAPPY VALLEY 2501 W HAPPY VALLEY RDPHOENIX AZ 85085
4314 QUEEN CREEK21002 S ELLSWORTH LOOP QUEEN CREEKAZ85242
437 SCOTTSDALE 8929 EAST INDIAN BEND RD SCOTTSDALE AZ 85250
3301 INDUSTRY 1600 S AZUSA AVE CITY OF INDUSTRY CA 91748
422 COMPTON 120 EAST COMPTON BLVD COMPTON CA 90220
235 CONCORD 2030 DIAMOND BLVD CONCORD CA 94520
236 DUBLIN7153 AMADOR PLAZA ROADDUBLIN CA 94568
449 ESCONDIDO1138 WEST VALLEY PARKWAYESCONDIDO CA 92025
4303 FAIRFIELD 1560 GATEWAY BLVD FAIRFIELD CA 94533
4230 NORTH FONTANA16685 SIERRA LAKES PARKWAYFONTANA CA 92336
4243 FOOTHILL RANCH 26542 TOWNE CENTRE DRIVE FOOTHILL RANCH CA 92610
4300 FREMONT 43706 CHRISTY ST FREMONT CA 94538
1628 MERCED 3275 R STREET MERCED CA 95348
3749 MIRA LOMA 6397 PATS RANCH RD MIRA LOMA CA 91752
4257 COLLIERVILLE 10217 EAST SHELBY DR COLLIERVILLE TN 38017
853 WINCHESTER6491 WINCHESTER RDMEMPHIS TN 38115
3823 SPRING HILL 1041 CROSSING BLVD SPRING HILL TN 37174
4338 MCALISTER SQUARE 12640 SOUTH FREEWAY BURLESON TX 76028
Circuit City Stores, Inc. Provides Update on Liquidity and Announces Store Closing Plan
-- Company Plans to Close 155 Stores, Further Reduce New Store Openings and Renegotiate Certain Leases --
-- Company Announces Ongoing Evaluation of Additional Cost Reduction Initiatives and Is Considering All Options and Alternatives to Restructure its Business --
RICHMOND, Va., Nov 03, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Circuit City Stores, Inc. (NYSE: CC) today provided an update on its liquidity position and its previously announced ongoing comprehensive business review. Due in part to its deteriorating liquidity position and the continued weak macroeconomic environment, the company has decided to take certain restructuring actions immediately, including closing 155 domestic segment stores, reducing future store openings and aggressively renegotiating certain leases. The company also is considering all available options and alternatives to restructure its business.
Business and Liquidity Update
Over the past several weeks, a number of factors have impacted severely the company's liquidity position. These factors include the following:
-- Waning consumer confidence and a significantly weakened retail environment have impacted negatively the company's sales and gross profit margin rate to a greater degree than management had anticipated previously.
-- Following the company's second quarter results announcement, the company's liquidity position and the sharply worsened overall economic environment led some of CircuitCity's vendors to take restrictive actions with respect to payment terms and the credit they make available to the company. Additionally, the recent disruption in the financial markets has contributed to certain of the company's vendors experiencing insurmountable challenges with obtaining credit insurance for the company's purchases. As a result of this and other considerations, certain of the company's vendors have set more restrictive payment terms than in previous quarters, including in some cases requiring payment before shipment. Vendors also have limited the credit available to the company for purchases, including in some cases not providing customary increases in credit lines for holiday purchases. While management is working diligently to secure the support of its vendors and believes it has maintained good relationships with these important partners, the current mix of terms and credit availability is becoming unmanageable for the company.
-- To date, the company has been unable to collect an income tax refund of approximately $80 million that the company believes it is owed from the federal government.
-- Due primarily to the weakened economic environment and its potential impact on the timing of sales of the company's inventory and costs and expenses associated with such sales, a recent third-party appraisal conducted for the company's asset-based credit facility resulted in a reduction of the estimated net orderly liquidation value of the company's inventory. This valuation adjustment was made despite the mix of merchandise remaining consistent with the previous appraisal in November 2007. This reduction has led to a lower borrowing base and reduced availability for the current period compared with what the company had expected previously.
James A. Marcum, vice chairman and acting president and chief executive officer of Circuit City Stores, Inc. said, "Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply. The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors. The combination of these trends has strained severely our working capital and liquidity, and so we are making a number of difficult, but necessary, decisions to address the company's financial situation as quickly as possible."
Domestic Segment Real Estate Actions
As a result of the company's ongoing asset productivity assessment and working capital situation, the company has determined to take the following initial actions with respect to its domestic segment real estate portfolio and strategy:
-- Close 155 stores and exit certain markets: CircuitCity plans to close 155 stores that are underperforming or are no longer a strategic fit for the company. The stores identified for closure are located in 55 U.S. media markets, of which CircuitCity will exit 12 U.S. media markets.
The company expects that impacted stores will not open on Tuesday, November 4, and the store closing sales will begin on Wednesday, November 5. The company expects the sales to be completed no later than calendar year end.
For fiscal 2008, the stores that are being closed generated in total approximately $1.4 billion in net sales. When results were viewed at the individual comparable store level, the closing stores, as compared to the stores remaining open, on average had lower net sales, a lower close rate and a lower gross profit margin rate. The stores, on average, were also unprofitable when marketing expenses were allocated to the individual store-level results.
Circuit City will continue to honor its customer commitments and serve its guests through 566 stores in 153 U.S. media markets, via its Web site at www.circuitcity.com and via phone at 1-800-THE-CITY (1-800-843-2489). During this transitional period, CircuitCity is executing a plan to minimize disruption to the operations of stores that are remaining open. No international segment stores are closing as a result of the real estate plans announced today.
-- Further reduce new store openings: The company has revised its store opening plans for the current fiscal year and will not open at least 10 locations that were previously expected to be opened. The company still expects to open up to two incremental stores during the remainder of fiscal 2009. As previously announced, other than existing commitments, management intends to suspend store openings beginning in fiscal 2010.
-- Renegotiate certain existing leases: CircuitCity intends to begin immediately renegotiating certain of its existing leases with the goal of significantly lowering rents. In some cases, the company may choose to negotiate with landlords to exit leases if rents are not reduced. The company also plans to work with landlords to terminate the leases for the stores included in today's closing announcement, as well as leases for a number of inactive locations that were closed previously and for the locations that are no longer being opened.
As a result of the store closures, CircuitCity expects to reduce store operating, payroll and marketing expenses. The store closures will result in a reduction of approximately 17 percent of the domestic segment workforce. The company also expects to incur charges in fiscal 2009 associated with the above real estate actions. The company is currently evaluating the benefits and expenses associated with these changes, which are subject to the outcome of negotiations and store closure agreements. Presentation on the financial statements is currently being evaluated for accounting treatment.
"We deeply regret the impact today's announcement will have on our associates, our guests and the communities where these stores are located. We truly are grateful to each of our associates for their many contributions to the company. We are also grateful for the loyalty and support we have received from our guests in the impacted communities. Circuit City will continue to serve guests through 566 stores in 153 U.S. media markets, via its Web site at www.circuitcity.com and via phone at 1-800-THE-CITY (1-800-843-2489)," concluded Marcum.
Evaluating All Options
As a result of unfavorable macroeconomic conditions and the company's deteriorating liquidity position, the company is considering all available options and alternatives for the business. Consistent with this evaluation, the company will continue to take appropriate actions to conserve cash, reduce expenses and improve liquidity. In addition, the company is continuing to evaluate additional near-term cost reduction initiatives that may be necessary to address its financial condition. The company is also in negotiations with its lenders and other third parties regarding various financing alternatives.
The company plans to operate its business without interruption while it engages in discussions with its lenders and works with advisors to determine the most appropriate restructuring alternatives. The company can make no assurance that the discussions will result in any agreements or transactions.
About Circuit City Stores, Inc.
Circuit City Stores, Inc. (NYSE: CC) is a leading specialty retailer of consumer electronics and related services. At October 31, the domestic segment operated 712 Superstores and 9 outlet stores in 165 U.S. media markets. At September 30, the international segment operated through 770 retail stores and dealer outlets in Canada. CircuitCity also operates Web sites at www.circuitcity.com, www.thesource.ca and www.firedog.com.
Excellent nuances there, which lead of course to a revamp of domestic policy, foreign policy, and the BIG one, Immigration reform........ We are on the cusp of 'identity lost' if policies are allowed to continue on in the fashion that they are currently being conducted.... Consider back door NAFTA policies.... Conducted under an aura of non enforcement...... The implications are such that Pandora's box is going to look like a happy meal from McDonald's..... Which implementations can only be supported at the expense of freedom and liberty...... There are ominous murmerings in the wind...... Lessons hard learned are being forgotten.... Written by
on 11/12/2008
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"Missed opportunity" - how else can one describe our forces taking over a large oil producing country, then "forget" to steal all of their oil production. Why not? They hate us anyway... As far as OPEC "extortion" - we are neither producing as much domestically as we could nor conserving as much as we could.... so, no "whining." Written by kpf
on 11/10/2008
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Speaking of extortion, oil was heading below $60.00 per barrel which is excellent, but it is inching its way back up to $63 and now OPEC wants to cut production again so that $70 - $90 per barrel will materialize…. So let’s hear some of that ‘scales of justice’ type of bologna….. Written by
on 11/10/2008
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Just being sociable there, and of course there are the spelling and grammer nazi approches used as an attempt to detract from a person's cognitive capabilities... Folks just love to keep score ya know...... Yes, there is change in the air... I can smell it................... Written by
on 11/10/2008
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"It is important that people be aware of abstracts such as you just pointed out...".... uh, yeah.... how clever of me.... very subtle in fact. Nice weather today (don't read anything into that...). p.s. I don't know whatcha mean about your spelling, it seems phine to me. Written by kpf
on 11/8/2008
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That is an excellent post KPF…….. And it DOES have great bearing on mindsets/jobs – occupation – economy……………….; It is important that people be aware of abstracts such as you just pointed out, and allow their minds to consider-contemplate the alternatives out there… Opportunity abounds, we simply need the element of atmospheric change to allow them to become realized… Aquaculture, hydroponics, agriculture, foods processing – packaging – marketing – distribution is a natural for the Louisiana culture…. And it can be done on a micro-management scale and still achieve macro-economics effects….. On the manufacturing side of things, there are so many opportunities it is unbelievable, yet everyone seems to want to go for the Godzilla stalk that will ‘hopefully’ bag a facility that costs many millions of dollars to build, and employ 40 – 100 people at a ha-ha 75K per year average salary… That is extremely foolish thinking, and an illogical tactical pursuit… What is necessary in an environment under siege are guerilla tactics… (My gawd my spelling is impruving, I haven’t mixspeled a wurd yet!) I suppose I write this way because I was afforded the experiences that allows me to see Louisiana from a different perspective than that constantly proclaimed as being the acceptable norm by the few in power… I was able to arrive here some decades ago, and hit and miss, trial and error, on fine bright sunny day I slipped into a crevasse that allowed me to accomplish in 3 years what would take others to accomplish in other places I am intimately familiar with a lifetime to manifest…. I hit the wall, and the wall was the re emergence of conditions that had hampered my advances for a decade before….. I had something someone else wanted, and I had the misfortune of having the ability to make it happen…. Control factors are practiced on a microcosim scale here in Louisiana…… And those control factors are largely composed of shackleing the human spirit and producing drones for the Beefeaters amusement or worse yet, for the complimentary Fief’s powerbase…. Written by
on 11/8/2008
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STUPENDOUS NEWS! I'm cookng a soup today (Great Northern beans, andouille sausage and kale).... anyway I bought some saffron as called for by the recipe. .06 oz cost 17dollars (holy heart attack!). So 16 oz / 0.06 = 266.66. Dat, time $17 = $4533.33 per LB!!! Written by kpf, I just thought I'd share that..you're welcome
on 11/7/2008
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Oh, almost forgot to add, and the major investors in the oil upswings? The insurance industry..... You see, they have a lot of cash money sent to them each and every month.... Quite the fluid position to be in... If you don't send your insurance payment in on time, you may get arrested for driving without it.... Yeah, insurance, and they play both ends of the game....... So, they were major cash cows in price control/speculation aspects...... Written by
on 11/7/2008
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That was the hilarious thing about the high fuel costs, in theory I suppose that was supposed to work to keep people in a more concentrated area, spending their dollars locally…….. Because it made no sense to burn $20.00 in fuel to save $15.00 on a product…. But the reality of it is; because of high fuel costs, there wasn’t any additional disposable income around period, sooooo… no predictable spending and no scheduled rotation of inventory could be accurately made… And where do the investment dollars for development projects come from in a large portion aside from junk bonds, penny stocks etc.? The insurance industry… And it is already tapped dry because only so much investment in X region will be made with profits…. Period, once that equation or formula has been reached, cut off time… The result? Well, Short Circuit City………………… Written by
on 11/7/2008
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You are absolutely correct when you wrote about those rent to own rip off programs... This last economic stimulus check thing? Walmart was on that bandwagon faster than a bum on a bologna sandwhich... Bring your check to wally world, put it on a wally world card, save money!! Or so the slogan went while it had a 20 some odd year old black gal and her pearly whites smiling on the poster... And again, I am sure that other stores are selling electronics, it isn't the end of the world yet... But again, disposable income within X amount of radius in miles per box store..... And so, it amounts to inventory turnaround, and everyone knows you can buy a soda pop for .85 cents at a convenience store, and you can buy one for 30 cents if you buy the whole sixpac at a grocery store.. Demographics... The amount of time and money it takes to fix a marketing problem that may only net an increased 4 or 5 % in gross sales, market saturation, easy money..... There you have it... Those are the concerns on the part of the big box... They are not in business to stay in business, they are in business to make the fastest dollar turnaround at the highest percentage return prescribed on any commodity that sits on their shelves... simple as that...... That is what is called a market formula.... Written by
on 11/7/2008
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Oh, you're completely right about the disposable income and your points about the demographics, etc. But people are still buying electronics at a remarkable pace. It's just that the most efficient and the stores with the best product at the best price are the survivors. But here's an exception to that model, or at least the other end of the spectrum. The rent-to-own stores and those that still find a way to offer ridiculously expensive credit. Those businesses are prospering. You can afford a lot of defaulted loans when you're charging 36% or some other obscene interest rates. And if Obama succeeds in sending tax credits to people with no reportable income, those predatory retailers and the "get your credit now - don't wait for your tax return" sharks will siphon off even more. They already clean them out with payday loans, pawn shops, and tax preparation scams. You can believe that they are already putting together their plans for ripping of uneducated and desperate tax credit recipients. Written by
on 11/7/2008
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"""If you stock the right stuff at the right price, you'll get the business. It's really that simple.""""" Uh, noooooo, but that tripe analysis sounded wonderful and really all-American... I am deeply moved..... But the subject isn't jobs (which really wasn't of issue, it is simply eye candy to make the package look more palatable) nor is it electronics, the sales of, or the lack of sales (because the inventory will be sold off through discount firms, or sent back in as much as possible for factory credit against future orders because the electronics really only cost a fraction of the retail cost to produce thereby insulating the manufacturing entity) What you really have here is 'junk bonds' 'penny stock' investment dilution..... That was dependent upon people having disposable income to spend.... In close proximity to those 'Box' stores... Walk up to any Circuit City, I've never been in one, but anyways.... Stand in front of it... Look to the left, and then look to the right.... Look across the street.... What do you see? Aside from sidewalks, parking lots, you will see a pizza hut, or a burger king, or a CVS pharmacy, or a Ryan’s, or some kind of chain boutique, a Kinko's, some doctors offices, maybe a quick serve convenience station, maybe even a gym.... The names change, but they are all the same... It is called development... Groups get together, do the demographics, look at the stop lights, the traffic flow, the neighborhood, how many apartments are nearby and they bring in pre packaged little development plans that include the soft pretzels, the video movie, the shoe store, and on and on and on......... It all survives on disposable income... The jobs? Not even the issue.... Store clerks? Merely someone to check out the merchandise, stock the shelves, maybe spend a little time getting the rap down so the sales technique sounds plausable like they know what they are talking about... The managers? Well, yes, upper tier workers because they are what run the store... Their job..... To prevent inventory shrinkage, keep the time clock costs down, the shelves stocked, and the floors swept.... And if a light bulb goes out, call the main office and get maintenance out to fix it.... What was really important was the upfront cost to build the ‘big box’ the terms of the lease, and a break even projection……….. So now there is not much money floating around in the neighborhoods, so, close it down…. If it were a serious business, well, they would probably spend a little more time trouble shooting it, but when lumped summed together, return on investment is key, and it is far less costly to decommission the area, and focus on more productive regions such as perhaps Texas, or Tennessee, or North Carolina, or elsewhere that consumes less attention…… While still maintaining a predictable inventory rotation schedule…. Oh, and the workers? Well, I feel for them.. Or actually the folks that spent around 7 or 8 thousand dollars a year to school them for a job that only takes 15 minutes to train for which in effect means anywhere’s from 80 to 120K was spent on that workers education from pre-K to the 12th grade so that it could earn $6.85 an hour…… And you wonder why there isn’t very much disposable income in the particular vicinity of that big box…… Oh, look forward to an additional 10% to 20% business shutdowns in those neighborhoods in the near future….
Written by
on 11/7/2008
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If anyone here is familiar with Circuit City over time, you'll remember that they changed their business model and went to salaried employees instead of commissioned salespeople a few years ago. When employees worked on commission, you couldn't take two steps in the store without a salesperson offering their help. They pushed to close sales, and to add peripherals and warranties to the purchase. At that point in time, Circuit City was extremely busy, but Best Buy had not moved as firmly into their territory, and online sales were just starting to take off. The Voice (I like that!) might say that commission sales exploited workers by paying the least possible wage, and pushing workers to sell if they were to make a decent living. Under that plan, I'm sure turnover was even greater, since lots of people tried sales jobs at Circuit City, but found that they didn't have the killer instinct and sleaze factor to succeed in commission sales. Just like car salesmen - they all think they'll get rich, but most fail, and most of the rest burn out. But as competition squeezed the margins of Circuit City, they switched to salaried employees and although I don't miss the salesmen, it can be hard to find help if you do need it. CC used to sell a lot of CDs, but as that market declined with the rise of downloaded music sales, the shelves at the CC near my house are stocked with about 75% hip-hop and rap CDs. That's a big market, but customers looking for anything except top 40 and urban music don't even shop CC any more. Written by the savvy shopper
on 11/7/2008
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Since you're not moderate or independent, we'll have to just call you "The Voice" from here on out. What is the point of your typical liberal sob story here? So these soon to be former employees of Circuit City will have to find a job. So they typically will be rehired at a lower wage. What is your alternative? Require Circuit City to stay in business to provide them with the jobs they are accustomed to? Does the fact that Circuit City did risk capital to open stores and provide these jobs in the first place require them to continue to provide jobs in perpetuity? One of these stores that will close is a few blocks from my house. I shopped there frequently. Unless I'm gravely mistaken, the turnover of employees at Circuit City must have been extremely high. I rarely saw the same employees there for more than a few months. I'm sure The Voice will blame that on oppressive corporate greed, refusing to provide fair wages and benefits to employees, resulting in employee turnover. But if Circuit City can't compete with Walmart and Best Buy under their existing plan, how would higher labor costs improve their chances of survival? I guess you'll say that better wages mean better employees mean more sales and more customers. Wrong again. In the cutthroat business of electronics retailing, it's about the products and the prices. If you stock the right stuff at the right price, you'll get the business. It's really that simple. Written by
on 11/7/2008
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While I agree that CEOs often make ridiculously huge salaries and bonuses - I believe in freedom. Companies should be free to pay their executives - and their "average workers" just as much as they like. Of course, the more they pay, the higher their product will be sold for. Fine... freedom. However "freedom" also means that millions of American - many (most) of whom do not have the high pay these workers may receive - should have the right to buy cheaper products manufactured by other companies so their money can go as far as possible. It is not "freedom" when government - for the benefit of CEOs OR union workers - FORCES (thru tariffs or import limits) the consumer to buy overpriced and often inferior products. As I've said before, let the market determine who the winners and losers are, government regulation should be minimal and new regulation suspect as it is often nothing more than political payback to big campaign donors. Alternatively, if we are going to have tariffs to protect high paying jobs in this country then let's do this for ALL industries to protect ALL workers. What we have now are laws and regulations that protect SOME industries and cause higher prices to ALL workers, including those who do not benefit from the protectionist legislation. All too often it is large campaign donors or bribing lobbyists who get “their” legislation passed. It is largely due to our politicians’ crookedness that I prefer pure market outcomes instead of (questionable) political manipulation of the market. Written by kpf, dat's it, i gotta wurk
on 11/6/2008
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How is it that union workers are the only ones who can be guilty of being greedy? If a CEO would rather close a U.S. plant so that he move those jobs to someplace where sweatshops and child labor are allowed, that's not excessive greed, I suppose. We're supposed to cherish that, right? Let all the CEO's who run their companies into the ground enjoy their bonuses and golden parachutes...they fully deserve them, right? No...for the life of me I can't understand blaming the average worker who just unfortunately gets caught up in these situations. All this criticism of the union member getting good money (as if unions have any clout in this country these days...it's been decades since they did) but nothing said about the management side whose members probably get nice bonuses for reducing costs. I'm just trying to stress that there are two sides to this and there are human consequences of these actions and not only that but that all the Wall St. types who seem to get a charge from hearing about companies reducing costs, well, these days it could very well their own turn to be the statistic. Written by Moderate Independent Voice
on 11/5/2008
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But perhaps more important, at least where Circuit City is concerned….. Don’t they sell all that obnoxiously expensive electronic crap necessary for playing those obnoxiously expensive video games that people seem so obsessed with? Well, if folks aren’t buying the game playing hardware because they have no dough, what makes you think they can afford the software programs that give those items the reason for their existence and/or availability? EA…………………………………… Great strategic move there Piyush……….. I can see the value of pursuing 'high tech' jobs... You have one hell of an advisory staff on hand…. Ha!-ha-!-ha!-ha!!!!!! Oh, and what about GM or even NUCOR??????????? ThyssenKrupp? Not going to even get into it……. Oh, but making baby cribs (which are ALL supplied to our domestic United States market through foreign imports aside from the few which the Amish produce) is an absurd idea I would suppose…… Yeah, a couple hundred thousand in manufacturing equipment, not a bad idea….. Especially when you consider that on average, around 10,000 babies are born EACH DAY in the United States….. Oh but that isn’t a big enough market…… Let me see…….. 2% of that value equals the potential prospect of 200 baby cribs per day that could be manufactured here in Louisiana and exported to the other 49 states…… How much do baby cribs cost? A lot more than a coffee pot or an end table I can tell you that much right now…… How many people would it take to manufacture, assemble and package 200 baby cribs each day would ya suppose there Piyush????? Yeah, yur a Rhodes Scholar alright…… Can Openers, neat subject….. You go buy one of those cheap hand operated ones made in China that flood the store shelves….. ehhh,,, $6.00 each retail? Useful life expectancy/serviceability of those shoddily made little tools? 4-8 months………. Cost to produce, assemble and package each one? Probably somewhere in the neighborhood of .62 cents each….. American……… Potential production/distribution values on a daily basis? Well, just a guess, but being as there are 10,000 babies being born in the United States each day I would suppose that number could be anywhere from 10,000 down to a low of 1……. And if only 1 can opener per day was needed in the United States, which only has a population value of 300+ million in comparison to the worlds 6 billion plus, I wouldn’t think it would be very difficult to export the other 9,999 can openers to other countries….. But then again, it is just a thought………. Among many that can cause 100’s upon 100’s of jobs to appear for Louisiana virtually overnight if people’s minds were right…….. And at very little cost……. Oh well Bobby, have a good time with the anticipated billion dollar or so budget deficit that is looming on the horizon…. I am sure that you, and all the geniuses you have surrounding you have everything figured out to the T……………………….. Written by
on 11/5/2008
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Uhhhhh,,, Moderate independent Voice..... Those workers have several choices, they can go on a welfare program, such as, ehhhh, become a state worker or a parish worker or a city worker...... or........ they can put in an application at WalMart....... Or....... You could rush down to circuit city and spend your lifesavings buying useless crap you really didn't need in the first place to keep them employed, or........ you could perhaps recommend something that would generate hundreds of jobs immediately, Hey, now that's a thought!!!!!! Who could have imagined such a novel concept as that??????? Oh well, have a nice life...... Oh, and avoid applications to places such as GM or any other U.S. based manufacturing or production entity as well.... Other folks around the globe can't afford our high priced crap either... Written by
on 11/5/2008
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So what do we do then? Do we take money from the working people to prop up the wagon makers who otherwise would lose their income due to those new-fangled horseless carriages? Should we do the same for those who work for the typewriter manufactures due to consumers choosing to buy PCs instead of typewriters? Perhaps we should not allow foreign car manufacturers to export their vehicles into our country? Better I believe is for our Detroit automakers to COMPETE with the Japanese and build (providing us - the consumer) with better vehicles. In the long run EVERYONE benefits when the market creates winners and losers. All too often what the government does is make "winners" out of industries that are simply NOT providing what the consumer wants. If the statistics you refer to that show those who re-enter the work force as making less are union workers who were making 70+ dollars an hour and priced their companies’ products out of business than yeah.... I'm sure they ARE making less money now. That's not the free market being cruel, that is union workers being greedy and foolish. Written by kpf
on 11/5/2008
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Nevertheless it's one thing to be dismissive and so casual about news like this, when, I suppose, it doesn't touch you directly unless you were a shopper at that store. It's quite another when you are actually among the laid off and you have to figure out what to do. Again, statistics show overwhelmingly that the majority of laid-off workers, when they do re-enter the work force do not re-enter it making as much as they had been making before. Written by Moderate Independent Voice
on 11/5/2008
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No, in actuality it is all directly proportional to 'fixed overhead costs', 'marketing costs', anticipated revolving inventory tax obligations based on FIFO OR LIFO, as well as, and just the same with AGF, the inability to provide meaningful dividends or share values on the open market to stock holders..... This coupled with the fact that more people have less money and durable goods are more desirable during a conservative market consumer period of time, but rather they are in the realms of 'new age' luxury items....... And although the R&D as well as the marketing campaign costs are astronomical, these items in reality cost very little to manufacture and deliver…… There are a lot of factors involved here…. Labor costs/values nor any form of ‘health policies’ or ‘benefits’ if they truly exist have any bearing on this subject….. Perhaps it is the absolute size of the operation on a per box unit basis that is partially at fault as well an efficient supply and deliver network…… It would take two or three weeks to figure their problem out, probably there biggest problem though is their ‘textbook’ approaches to business and they forgot that value is just as desirable as a huge selection at non existent low prices….. I am sure that the sale of hand operated can openers have skyrocketed in this past month….. Perhaps by 20 to 45% Written by
on 11/4/2008
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No doubt many workers and business owners in the wagon making industry were out of work due to Ford's Model-T as were typewriter workers who became unemployed due to Steven Job's and Bill Gates' personal computers. This is normal and is due to market forces (namely consumer choice). The only thing "bad" about this is when government tries to intervene and prop up businesses which need to fail due to their not providing the consumer what they need. Perhaps the reason Circuit City failed is they became too greedy and opened more stores (supply) than there were consumers to buy their products (demand). This only shows that prudence, frugality and not over-reaching to claim too much of the market for oneself provides a path whereby a business can continue to survive vs. a business that attempts to corner more of the market than is advisable. This failure - although hard on the stockholders and employees - does serve the purpose of showing other businesses the consequences of stretching their assets too far. No government bailout needed, just an (another) example of a formerly successful enterprise that “got too big for its britches” by attempting to expand too much, too fast. Written by kpf
on 11/4/2008
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It's more like the little guys who were working for them are having to suffer. Say what you will but especially with the holidays coming this stinks...and statistics show that the majority of people who get laid off, when they re-enter the work force, do not re-enter making as much as they were making before. Wall St. always seems to love hearing about companies laying people off. Guess what? This time, they're not immune to it. Written by Moderate Independent Voice
on 11/3/2008
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NO! NO! NO! You don't understand... Circuit city is "too big to fail"!!! We must take money from taxpaying citizens to keep this company solvent. Help us Barney Frank, you're our only hope! Written by kpf
on 11/3/2008
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Well, it is sort of simple, if more people have less money, then who is going to buy their stuff????? Written by
on 11/3/2008
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