Circuit City, the electronics retailer based in Richmond, is closing its doors. A bankruptcy judge approved a liquidation plan today and the chain will start its going out of business sales on Saturday.
Battered by the economic turndown and agressive competition from rival Best Buy, Circuit City tried closing many stores and reorganizing under Chapter 11 last year but it turned out to be too little too late.
Circuit City, once a bellwether American retailer, is going out of business for good, stripping the nation of its second-largest consumer electronics chain.
The company, which filed for bankruptcy protection in November, said Friday that it would liquidate its stores and other assets.
Just last week, Circuit City — which has some 30,000 employees and 567 stores — was in talks with two potential buyers, but it was unable to reach a timely agreement with its creditors and lenders.
“We are extremely disappointed by this outcome,” said James A. Marcum, vice chairman and acting president and chief executive of Circuit City Stores Inc. He called the liquidation “the only possible path for our company.”
The demise of Circuit City, while not surprising given its declining sales, is part of a radical shift taking place in American retailing. Weak chains — unable to weather the freeze-up in consumer spending, and choked by tight credit markets — are shuttering their doors.
Last year, a raft of retailers including Boscov’s, Sharper Image, Mervyns, Linens ’n Things, Whitehall Jewelers and Steve & Barry’s filed for bankruptcy protection. This week alone, Goody’s Family Clothing and Gottschalks Inc. also filed. Many more retailers are expected to follow suit as they run out of working capital or are unable to finance their debt. But emerging from bankruptcy is harder than ever because of changes in the bankruptcy code and vise-like credit markets.
Once the dominant electronics retailer in the area, Circuit City was down to one store at Valley View Mall in Roanoke while Best Buy opened a second area store in Christiansburg last year to compliment its Roanoke location.