Circuit City Stores, the nation's second-largest consumer electronics retailer, said yesterday that tightened credit and rapidly declining consumer spending have forced it to file for bankruptcy protection. . .
Just a week ago, Circuit City said it would shut down 155 stores and cut 17 percent of its workforce to try to stave off bankruptcy. But suppliers remained skittish, in some cases demanding payment before merchandise was received and refusing to increase credit for new purchases. On Friday, it let go an additional 1,300 employees, including staff at its headquarters in Richmond. It filed for Chapter 11 bankruptcy protection yesterday to begin reorganizing its business.
. . . Circuit City stores will remain open, and customer warranty and service plans will not be affected, the company said.
The retail industry has been rattled over the past year as shoppers slashed their spending by the largest amount in nearly three decades. Sales in nearly every category have plummeted as Wall Street imploded and housing prices remained depressed. Holiday sales are expected to have their weakest growth in years. Circuit City was the latest in a long line of retailers to fall this year. . . .
Circuit City, founded in 1949 as a Richmond appliance store, recorded annual profit of nearly $200 million just a few years ago. But . . . posted nearly $320 million in losses in the last fiscal year, its second consecutive annual shortfall. . . .
Vendors began to worry that Circuit City would not have the cash to pay them. The company's most recent quarterly filing showed that it had total assets of $3.4 billion with $2.3 billion in liabilities. According to court filings, Hewlett-Packard holds the most unsecured debt, more than $118.8 million. Samsung Electronics is due nearly $116 million, while Sony has more than $60 million in claims. Circuit City tried to assuage its suppliers by holding face-to-face meetings and closing unprofitable stores, court documents show. But vendors were skeptical, and credit tightened. . .
Under the terms of the bankruptcy, Circuit City has negotiated a $1.1 billion revolving line of credit with Bank of America that will allow it to buy merchandise for Black Friday -- the all-important day after Thanksgiving -- and the remainder of the holiday season. On Dec. 29, the credit amount will drop to $900 million.
Bankruptcy also allows Circuit City to terminate leases at the 155 stores that it announced it would close last week. In court documents, Circuit City said it hopes to emerge from bankruptcy protection in the first half of 2009. Marcum said he hopes the filing will give vendors confidence in the company's ability to pay them and create a more efficient operation.
The New York Stock Exchange suspended trading of Circuit City shares yesterday, the company said in a statement. The stock has lost more than 96 percent of its value over the past year.
http://www.washingtonpost.com/wp-dyn/co ... id=topnews
Check out their stock: http://finance.google.com/finance?q=NYSE%3ACC Basically a steady decline since the tech bubble burst in 2000, with a couple of aborted attempts at recovery. I'll not be holding my breath for them this time round.