Our American visitors will be saddened – or not, depending on your particular viewpoint – at the news that US high street computer giant Circuit City has filed for Chapter 11 bankruptcy protection.
According to BetaNews
, the fifty-nine year old company – which only last week announced a programme of job cuts and store closures that would see its workforce drop by 17 percent and a whopping 155 shops closed for good – has encountered further problems, with concern over cashflow and the company's ability to pay its vendors for stock escalating “considerably.
” The credit crunch hasn't helped things, either: with consumer spending down and cashflow looking weak, vendors are demanding cash up front rather than extending the traditional lines of credit for stock the company will need to see it through Christmas.
Current CEO James Marcum issued a statement yesterday stating that he realised that “there is never a good time for individuals to be impacted by decisions like these, and we deeply regret the effect this has on our associates. I want to thank them for their continued loyalty and dedicated effort as we go forward with the belief that implementing long-term and lasting change to our business will come by satisfying our customers, one at a time.
The announcement of the Chapter 11 filing sent the company's share price tumbling 56 percent, totalling a 99 percent drop from the 52-week high of $8.24 it once enjoyed. Despite this bleak outlook, the company is still hoping to keep afloat: a $1.1 billion loan will ensure that it can keep stores open during the busy holiday period, while the closure of 155 stores described as “underperforming
” and loss of 7,300 jobs should help trim the bottom line. Let's hope, for the sake of the company's remaining employees, that it can get through this tough time unscathed.
Do you believe that Circuit City can make it out of Chapter 11, or does the company need a radical rethink to dig itself out of this hole? Share your thoughts over in the forums