Circuit City might close 150 stores, as possible bankruptcy looms
Circuit City is considering closing 150 stores or more, according to a report today. Even worse, the retailer could be facing bankruptcy if holiday sales fizzle as expected, say some financial analysts.
After posting a $162.7 million quarterly loss even before the financial crisis hit, Circuit City might either land in bankruptcy court or be forced to close more stores soon after the New Year, some financial experts are predicting.
Without a strong holiday season, Circuit City "significantly increases bankruptcy risk," said Michael Baker, an analyst at Deutsche Bank, in a note to clients at the end of September.
"The risks of bankruptcy are very real, in our opinion," concurred
David Schick, an analyst at Stifel Nicolaus.
As previously reported in BetaNews, during a conference call with analysts about the dismal second quarter financial results, Circuit City Executive VP and CFO Bruce H. Besanko vowed that the retailer will launch a turnaround centering on an improved "customer experience."
Circuit City has proceeded to hire FTI Consulting Inc. to create a turnaround plan and investment bank Rothschild to try to come up with emergency financing, according to a report today in The Wall Street Journal.
The retailer is also contemplating closures of at least 150 stores, in addition to job cuts, said the WSJ.
"The management team, board of directors, and its strategic financial advisers are conducting a comprehensive review of all aspects of our business to determine the best methods of accelerating our turnaround," a Circuit City spokesperson responded in a statement today.
Meanwhile, industry leader Best Buy -- which keeps making more competitive headway vs. distant second-runner Circuit City - recently announced that it is working with top vendors to produce a new Blue Label line of laptops, expressly tailored to requirements voiced by its customers.