January 16, 2009
Time has run out for Circuit City. The nation's second-largest electronics retailer has failed to find a buyer and said it will begin liquidiation proceedings, putting up to 30,000 employees in the United States and Canada out of work.
The fate of Circuit City's Canadian operations was not immediately known. The bankruptcy liquidation announcement Friday applied only to the company's U.S. properties.
Golden Gate Capital was considered a leading bidder. Another was Mexican billionaire Ricardo Salinas Pliego, who acquired one-quarter of Circuit City's stock after the bankruptcy filing. But neither came through in time to avert a deadline set by a bankruptcy court judge last week.
Circuit City filed for bankruptcy protection in November and closed 155 stores but its cost-cutting efforts couldn't keep up with plummeting sales, as U.S. retailers suffered through their worst holiday season ever.
Analysts say that 75 percent of the company's sales are made on credit cards. As credit card issuers clamped down hard on consumer credit late last year, customers scaled back on their purchases, hitting Circuit City hard and flattening the usual bump in holiday sales.
Circuit City was the No. 1 electronics retailer in the 1990s and is credited with inventing the electronics box store model. It sought to branch out into other businesses, including home security, DVD rentals and CarMax. None of those businesses took off and critics say they drained Circuit City's cash and expertise, allowing Best Buy to take the top spot in electronics sales.
