News: Circuit City Files For Bankruptcy
Monday, Nov 10, 2008 10:30AM
Mega retailer Circuit City has filed for bankruptcy protection today (November 10) as a result of a weakened economy and smaller consumer base.
According to CNN, the company announced filing for Chapter 11 which will allow reorganization under strict limitations under the United States' bankruptcy laws.
"Chapter 11 is not a closing or a liquidation," the company wrote in an e-mail to CNN. "We remain committed to doing a better job of taking care of our guests, and making it easier to shop at Circuit City."
While the company banks on consumers taking advantage of significantly marked down merchandise like big screen televisions and computers from select liquidated stores, retail analysts are not as confident.
"Consumers will be skeptical about buying a $1,000 or $2,000 flatscreen TV with a warranty at Circuit City," Customer Growth Partners president Craig Johnson told CNN. "In their mind, there's no guarantee that the company will still be around in the future."
Although concern may exist from outsiders, the choice to file for bankruptcy protection is one made strategically by the company's president, James Marcum.
"The decision to restructure the business through Chapter 11 filing should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and ultimately position the company to compete more effectively," Marcum told CNN.
Despite a number of stores likely to begin closing in the coming months, many Circuit City locations will remain open and are expected to compete at competitive prices matching Best Buy.
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