Wednesday, February 10, 2016

Business

Circuit City weighs bankruptcy, store closings: WSJ

Circuit City Stores weighs bankruptcy reorganization or store closings and inventory liquidation to weather weak sales and tight credit markets, says a Wall Street Journal story, citing unnamed sources.

Circuit City weighs bankruptcy, store closings: WSJ

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Specialist Arthur Andrews, foreground, works at his post on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)
Specialist Arthur Andrews, foreground, works at his post on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

  Circuit City, squeezed by weak retail sales and higher financing costs, is weighing whether to close some stores and sell inventory to raise cash, or file for bankruptcy protection and risk scaring away Christmas shoppers, says a Wall Street Journal story, citing unnamed sources.
  Things are tough all over in the high-volume, low-margin computer and home electronics retail business: Circuit City shares are down more than 90 percent this year; rival CompUSA shut down; rival Best Buys Inc. shares are off more than 50 percent.

   WSJ: "Circuit City Stores Inc. is considering a plan to close at least 150 stores and cut thousands of jobs, as an alternative to filing for bankruptcy-court protection, said people familiar with the company.
   "Earlier this month, the nation's No. 2 electronics retailer by sales hired Skadden, Arps, Slate, Meagher & Flom LLP -- the law firm that oversaw the Chapter 11 reorganization of Kmart -- as its bankruptcy counsel... Circuit City also retained FTI Consulting Inc. to develop a turnaround plan and investment bank Rothschild Inc. to... secure emergency financing, these people said...
   "So far, amid tight credit conditions, lenders have shown little interest in providing such financing to Circuit City, which has 714 stores in the U.S...
   "Circuit City management, investors and advisers are trying to avoid a bankruptcy filing before the holiday season, people familiar with the matter said, fearing customers might doubt the ability of a retailer involved in bankruptcy proceedings to provide warranties on products like laptop computers and flat-screen TVs." Story here.

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About this blog

PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, 215.854.5194, @PhillyJoeD. Read his blog posts at http://www.philly.com/PhillyDeals and his Inquirer columns at http://www.philly.com/philly/columnists/joseph-distefano/. Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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