We called it: Circuit City is closing 155 stores, not even waiting to see if holiday sales have a chance of propping up the 700-store chain. This is a very bad sign; I’d look to see if Circuit City is one of the titans to fall in January. Consumerist has the complete list of stores to close. The cuts are heavy in Georgia, Arizona, California, Illinois, and Ohio, and they’re scooting out of some markets entirely. Surprisingly, the Northeast is largely spared with only one store in New England to shut and relatively few in the New York City metropolitan area.
The company has posted six straight quarters of falling sales. Circuit City hired FTI Consulting Inc. and replaced its chief executive officer in September after losing customers to Best Buy Co. and Wal-Mart Stores Inc. Circuit City is closing stores in 55 metro areas and will exit 12 of those markets altogether, including Atlanta, Phoenix and Kansas City, Kansas.
Circuit City is closing stores that contributed $1.4 billion in revenue last year, an average of about $9 million per store. Average revenue per U.S. store last year was about $16 million. The retailer, founded in 1949, has struggled with older stores in less desirable locations.
“Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply,” CEO James Marcum said in the statement. “The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors.”
Circuit City tried to sell itself in May after Blockbuster Inc. made a preliminary offer that was later withdrawn. It fired higher-paid workers and opened smaller stores to cut costs. Until the shift to smaller stores, Circuit City’s strategy had been to sell in locations as large as 44,000 square feet.
In the meantime, we missed the story last week but the long-beleaguered Value City department store chain will be closing all of their remaining locations. Frankly, this one seems overdue; Value City’s dowdy, confusing fleet of stores always felt like a relic from the ’70s, and they long ago lost any specific value proposition. Frankly VC has been a weaker player than even Kmart (or even the more-comparable Mervyn’s) for a long time. Economic downturns like this one tend to clear out the deadwood first, and it’s hard to define Value City as much else.
Interestingly, Value City’s closing will have a heavy impact on some marginal shopping malls. The Shore Mall near Atlantic City is one that comes to mind, as does the Fairlane Village Mall in Pottsville, Pennsylvania: the center is anchored by only Value City and Boscov’s, two troubled chains.
Speaking of Kmart, if they Ch. 11 on me… Darn I hate Walmart.
I’m reposting this article from the Mervyn’s thred here.
Circuit City Stores, Inc. Provides Update on Liquidity and Announces Store Closing Plan
– Company Plans to Close 155 Stores, Further Reduce New Store Openings and Renegotiate Certain Leases –
– Company Announces Ongoing Evaluation of Additional Cost Reduction Initiatives and Is Considering All Options and Alternatives to Restructure its Business –
RICHMOND, Va., Nov 03, 2008 /PRNewswire-FirstCall via COMTEX News Network/ — Circuit City Stores, Inc. (NYSE: CC) today provided an update on its liquidity position and its previously announced ongoing comprehensive business review. Due in part to its deteriorating liquidity position and the continued weak macroeconomic environment, the company has decided to take certain restructuring actions immediately, including closing 155 domestic segment stores, reducing future store openings and aggressively renegotiating certain leases. The company also is considering all available options and alternatives to restructure its business.
Business and Liquidity Update
Over the past several weeks, a number of factors have impacted severely the company’s liquidity position. These factors include the following:
– Waning consumer confidence and a significantly weakened retail environment have impacted negatively the company’s sales and gross profit margin rate to a greater degree than management had anticipated previously.
– Following the company’s second quarter results announcement, the company’s liquidity position and the sharply worsened overall economic environment led some of Circuit City’s vendors to take restrictive actions with respect to payment terms and the credit they make available to the company. Additionally, the recent disruption in the financial markets has contributed to certain of the company’s vendors experiencing insurmountable challenges with obtaining credit insurance for the company’s purchases. As a result of this and other considerations, certain of the company’s vendors have set more restrictive payment terms than in previous quarters, including in some cases requiring payment before shipment. Vendors also have limited the credit available to the company for purchases, including in some cases not providing customary increases in credit lines for holiday purchases. While management is working diligently to secure the support of its vendors and believes it has maintained good relationships with these important partners, the current mix of terms and credit availability is becoming unmanageable for the company.
– To date, the company has been unable to collect an income tax refund of approximately $80 million that the company believes it is owed from the federal government.
– Due primarily to the weakened economic environment and its potential impact on the timing of sales of the company’s inventory and costs and expenses associated with such sales, a recent third-party appraisal conducted for the company’s asset-based credit facility resulted in a reduction of the estimated net orderly liquidation value of the company’s inventory. This valuation adjustment was made despite the mix of merchandise remaining consistent with the previous appraisal in November 2007. This reduction has led to a lower borrowing base and reduced availability for the current period compared with what the company had expected previously.
James A. Marcum, vice chairman and acting president and chief executive officer of Circuit City Stores, Inc. said, “Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply. The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors. The combination of these trends has strained severely our working capital and liquidity, and so we are making a number of difficult, but necessary, decisions to address the company’s financial situation as quickly as possible.”
Domestic Segment Real Estate Actions
As a result of the company’s ongoing asset productivity assessment and working capital situation, the company has determined to take the following initial actions with respect to its domestic segment real estate portfolio and strategy:
– Close 155 stores and exit certain markets: Circuit City plans to close 155 stores that are underperforming or are no longer a strategic fit for the company. The stores identified for closure are located in 55 U.S. media markets, of which Circuit City will exit 12 U.S. media markets.
The list of closing stores can be found by visiting the company’s investor information home page at http://investor.circuitcity.com and clicking the link regarding today’s announcements. The company expects that impacted stores will not open on Tuesday, November 4, and the store closing sales will begin on Wednesday, November 5. The company expects the sales to be completed no later than calendar year end.
For fiscal 2008, the stores that are being closed generated in total approximately $1.4 billion in net sales. When results were viewed at the individual comparable store level, the closing stores, as compared to the stores remaining open, on average had lower net sales, a lower close rate and a lower gross profit margin rate. The stores, on average, were also unprofitable when marketing expenses were allocated to the individual store-level results.
Circuit City will continue to honor its customer commitments and serve its guests through 566 stores in 153 U.S. media markets, via its Web site at http://www.circuitcity.com and via phone at 1-800-THE-CITY (1-800-843-2489). During this transitional period, Circuit City is executing a plan to minimize disruption to the operations of stores that are remaining open. No international segment stores are closing as a result of the real estate plans announced today.
– Further reduce new store openings: The company has revised its store opening plans for the current fiscal year and will not open at least 10 locations that were previously expected to be opened. The company still expects to open up to two incremental stores during the remainder of fiscal 2009. As previously announced, other than existing commitments, management intends to suspend store openings beginning in fiscal 2010.
– Renegotiate certain existing leases: Circuit City intends to begin immediately renegotiating certain of its existing leases with the goal of significantly lowering rents. In some cases, the company may choose to negotiate with landlords to exit leases if rents are not reduced. The company also plans to work with landlords to terminate the leases for the stores included in today’s closing announcement, as well as leases for a number of inactive locations that were closed previously and for the locations that are no longer being opened.
As a result of the store closures, Circuit City expects to reduce store operating, payroll and marketing expenses. The store closures will result in a reduction of approximately 17 percent of the domestic segment workforce. The company also expects to incur charges in fiscal 2009 associated with the above real estate actions. The company is currently evaluating the benefits and expenses associated with these changes, which are subject to the outcome of negotiations and store closure agreements. Presentation on the financial statements is currently being evaluated for accounting treatment.
“We deeply regret the impact today’s announcement will have on our associates, our guests and the communities where these stores are located. We truly are grateful to each of our associates for their many contributions to the company. We are also grateful for the loyalty and support we have received from our guests in the impacted communities. Circuit City will continue to serve guests through 566 stores in 153 U.S. media markets, via its Web site at http://www.circuitcity.com and via phone at 1-800-THE-CITY (1-800-843-2489),” concluded Marcum.
Evaluating All Options
As a result of unfavorable macroeconomic conditions and the company’s deteriorating liquidity position, the company is considering all available options and alternatives for the business. Consistent with this evaluation, the company will continue to take appropriate actions to conserve cash, reduce expenses and improve liquidity. In addition, the company is continuing to evaluate additional near-term cost reduction initiatives that may be necessary to address its financial condition. The company is also in negotiations with its lenders and other third parties regarding various financing alternatives.
The company plans to operate its business without interruption while it engages in discussions with its lenders and works with advisors to determine the most appropriate restructuring alternatives. The company can make no assurance that the discussions will result in any agreements or transactions.
Dang, breaking news! I read it here before I saw it on the news. Good job!
So, Circuit City, let me think… this is the place that fired its sales force and offered to rehire some of them at far less pay.
This has been one of those stores that you wonder how it could possibly be in retailing when they haven’t a clue on how to run a business.
I wonder if the CEO will get a big bonus.
Scott
Does this affect Burlington Coat Factory stores as well, seeing as they just bought VC?
And just as a side not, it’s 3:40 right now, bur BIGMallrat’s post says that it was posted at 3:58. Did Labelscar forget to change their clocks or something?
I won’t miss Circuit City, but I hate that they’ll be gone because it’s less competition for Best Buy. Our Huntsville Circuit City always has some annoying high-pitched security beeper going off every few seconds on something somewhere in the store. Every time I go in, I’m reminded of why I hate shopping there and why I don’t go more often.
Circuit City’s logo I think, is what did them in. It’s so freakin’ ugly! And Value City, their newer logo is ugly too.
Circuit City is only axing one store here in WI, but it’s not a suprising location. It’s the W. Brown Deer Rd. Seems Northridge Mall’s closure is taking that entire retail drag down with it.
Value City has a furniture store in that mall’s former Boston Store building. I’ll take that being gone as well with VC’s impending demise.
Oops. I meant to say. the CC store being closed here is the location on W. Brown Deer Rd. It’s an anchor to the mostly-empty Northridge Plaza.
The first time I went to a Circuit City was 20 years ago in Aventura FL. I thaught it was so much cooler than Nobody Beats the Wiz. New Yorkers on this site will understand, Wiz stores for the most part were drab in design & had a difficult layout to walk through, while Circuit City stores were much flashier with bold colors & interactive displays making it fun to go from one department to another. New York din’t get CC until the Wiz closed a few years ago, now CC is in the very same spot. The store @ Palisades Center is on the hit list for closure & as well as 9 others in the NY area.
One of the stores on that list is over at my local mall (Great Lakes Crossing in Auburn Hills, MI). I’m not surprised to see that one close because it always felt empty and there was’nt a great selection on stuff there, even during the holiday season. I hope the H&M next to it takes over the space so they can make their store bigger.
They’re also closing a CC Outlet store in nearby Pontiac which is across from the dead Summit Place Mall. Another vacancy for that retail area…
Ahahahahaha SLAASSSH IIITTTT!!!!!!
Also yeah, Value City is not surprising, they were pretty lame to begin with.
The San Rafael, CA store being closed is not surprising at all. It is well off the beaten path in a largely hispanic neighborhood. No sigtlines from the freeway or a major arterial, no other shopping around it. You had to know the store was there, make your way through the throngs of folks coming up to the car asking for work. Once at the store, the decor was firmly left in the 80’s. The bright red front had worn to almost a pink and weeds grew through the rocky parking lot pavement. This is all really the image folks wanted when plunking down several thousand bucks for a high end electronic something or other.
Good Guys in Corte Madera Town Center was always the better bet, until they folded a few years ago. The location is now a PF Changs. When Best Buy came into the area, first in Marin City about 15 min to the south then more recently in San Rafael just a few minutes away right next to the freeway in a better part of town and near the Borders, ToysRUs, and Staples, CC just wasn’t a viable option any longer.
The only store that CC is closing in the St. Louis area is the only old style store left (the one with the plug for the entry way), and it isn’t in the best area (Florrissant). All the other stores have new style stores. It is strange to see one of the old Circuit City’s like this at Bridgeton, MO was turned into a church, but it still looks like Circuit City…
Value City Furniture will not be closing. They are owned by a separate company
Last year, Retail Ventures (which also owns DSW and Filene’s Basement) sold some Value City stores to Burlington Coat Factory. Most of them ended up being closed,
Earlier this year, Retail Ventures paid a group of private-equity investors $500,000 to take over the rest of the retailer’s stores . The sale of the 81 percent stake in the chain, to a company formed by VCDS Acquisition Holdings, Emerald Capital Management and Crystal Value, left Retail Ventures with the remaining 19 percent stake.
DSW is the largest unsecured creditor, with about $4.5 million in claims, for technology and accounting services. DSW also
Not surprised by the list of Circuit City closings, or where they’re hitting the most. Circuit City is a relative newcomer to the Northeast; when I moved from NJ in the mid-90s, they were only starting to make inroads into the NY area. The big category-killer when I left, Nobody Beats the Wiz, is long gone, so the market was there, and the stores are all newer. In contrast, the store closings in the Baltimore/DC area involve aging stores in not-so-great locations. I’m genuinely surprised that the McLean store even made it to this list. While it’s across from Tysons Corner, which is still the undisputed king of DC-area malls, it hasn’t seen an update in years and is in close proximity to a shiny new store that opened a couple years ago.
Oh yeah, and unlike Best Buy and most stores of its size and ilk, Circuit City does not take debit cards unless they have a credit-card logo. (Mine doesn’t because the last thing I want is to lose my card and have someone drain my bank account.) Consequently, they haven’t seen my money in years.
matt the vc furiniture stores have no tyes to the department stores any more and are a seperate company. as far as the brown deer vc it dose farly well concidering ware it sits one of my best frends is the store manager of that store and says it is vary much a day store not a lot of night time sales. oh he has also been trying to get into the mall to see it in there but has not been able to yet if he dose i will post on my site to let every one know what shap it is in i got a felling its perty bad in there.
The only Brooklyn Ny location that is closing just opened in AUGUST 28. The store at least lasted two mouths.
I hope Circuit City does not close though. I like Circuit City better than Best Buy. I guess maybe because, I am used to shopping at Circuit City more.
The Cheltenham Mall outside of Philadelphia has had a VC anchor for years that seemed to do good business. The mall is a lot like the Shore Mall, so I wonder what will happen to the rest of the mall.
It is not looking good for the 2 tenants that took over the closed Mervyn’s at Deerbrook mall here in Northeast Houston. Steve and Barry’s took over the first floor of the anchor and Circuit City took over most of the top floor. At least they are not closing at the moment and both of the companies have a small chance of making it out of this mess. I feel bad for all of these people losing their jobs with these companies. I am sure the store level managers were puppets for the companies bad decisions and had to deal with it or lose their jobs. If you are only allowed to pay a low dollar amount to employees you do not have much interest in positions and have to hire what you get. It is a downward cycle that should have never been started with the decision to layoff higher paid employees.
Looks like only Chicago area stores are closing here in Illinois. Suprised that none in Central IL closed, esp. Decatur location is bad and looks crappy. Here in Bloomington, Circuit City is in a strip center with K-Mart and OfficeMax (YIKES!!!). The center is already mosty dead, just losing a Big Lots not too long ago.
CNET has a particularly devastating column today about Circuit City’s grim turnaround chances:
http://news.cnet.com/8301-13506_3-10082061-17.html
The VC at the Shore Mall was already going out of business when I was there about 2 months ago.
Speaking of Best Buy, is it just me or are their a number of BB stores located right NEXT to a Circuit City? I’m asking because everytime I pass by a Circuit City, there’s always a Best Buy directly across from it (or in some cases, right next to it). I think Best Buy chewed into CC’s customer base because some people think BB has better customer service. (I generally think they are both the same with customer service varying at different individual stores.)
Circuit City hasn’t yet closed any stores along the central Gulf Coast (New Orleans, Mobile, Florida Panhandle region). In fact, they’re prepping a new, smaller format store (The City) as a power center anchor in suburban Baldwin County, AL.
Nitek, take a look at the list. Metairie, Slidell, and Marrero in the New Orleans suburbs are going out of business starting Wednesday. New Orleans (City Proper) only had store in the east that closed after Katrina flooded the area.
Just a quick correction JohnE, the older, very large Kenner Circuit City on Veterans Boulevard that opened in 1993 is being closed. About 2 years ago, CC opened one of their brand new stores in Metairie not to far from Lakeside Shopping Center on the other end of Veterans Blvd, and that location will remain open. Also the older store on Airline Hwy in Baton Rouge that also opened in 1993 is being closed. This is an older store that was completely remodeled, unlike the typical older stores that many other posters described. For an old store, it had a very new and energetic look like the new store concept. It is sandwiched in between 4 big box stores, including Baton Rouge’s only ToysRUs, Haverty’s(formerly The Sport’s Authority that was only open from 1996-99), Ethan Allen and one of 3 Baton Rouge area Petsmart stores. The electronics/appliance chain Conn’s has a store right next to the Airline Hwy store. Also, both the Kenner and Marrero stores have an A1 electronics/appliance stores next to both those CC locations so there will not be a complete void left in these parts of town.
Both A1 and Conn’s are almost like Circuit City and Best Buy except they do not sell any CDs and DVDs, and there computer departments are smaller. But they do sell appliances, something Circuit City gave up many years ago. Does Best Buy still sell appliances? I never notice when I go there.
I’ve noticed that nearly every place selling any higher-end audio and video equipment has run into trouble the past few years. There used to be lots of smaller independent audio and video shops that sold high-end equipment, but all of them have gone out of business due to the competition from the big-box stores. We had a Tweeter store here in Huntsville, AL for a while, and it sold some higher-end products that Best Buy and Circuit City didn’t, but they seemed to want about 10 percent more for the lower end stuff than other stores did.
Best Buy has a lot of stuff, but they seem to carry a lot of the “lowest common denominator” type of audio equipment and speakers, with very little higher-end. Circuit City seemed to carry the low-end and a little bit of higher-end stuff too. With them gone, Best Buy and places like Sears and Wal-Mart will be all that’s left selling audio and video equipment. Does this spell not only an end for Circuit City, but for higher-than-average-quality audio equipment and speakers as well? Is high quality, high fidelity sound dead these days, with no hope of making a comeback?
The “buy a home theatre in a box” mentality has destroyed the market for piecing together a great combination of high-end components for great sound. People are happy to spend a few hundred and get a set of low-quality speakers and a mediocre amplifier and say they have a home theatre sound system to go with their big screen TV.
Pretty interesting. We just had a new lifestyle center (outdoor mall) open in September in South Barrington, IL called The Arboretum. It has a brand new Circuit City. Guess what, that it’s on the list to be closed. Well, that didn’t last long. LOL!
Chris, why don’t you write in to Sound & Vision Magazine with that? I’m sure Ken or one of the staff will answer you back.
@JohnE: whoops, I only gave the list a cursory look.
@Jaime B: Yes, some of the larger Best Buy stores sell appliances, and there is a smaller selection in the smaller stores. That seems to be the case from what I’ve seen in a couple of markets.
Thanks Jaime, correction noted.
Does anyone remember Silo and Campo that were in the New Orleans area?
Circuit City could stay in business if the cut back on receipt paper. Ever notice your receipt for a CD is about 2ft long and 6in wide. They waste millions every year on paper to make these monsters. Just an idea.
I remember Slio in the Chicago area many years ago. Some locations were inside Marshall Fields stores. I wasn’t impressed with the place; never had a good selection of video games ( I was 13 at the time) and service was usually poor. Highland, Polk Bros. and Fretter were much better choices than Silo. They are all gone now
Chip,
The same could be said for Best Buy as well. There reciepts are a mile long & never fit in your walet. The reward zone pin number is at the very bottom & you will have a hard time finding it, unless you know where exactly where to look.
Kmart tends to print insanely long receipts as well, I’ve noticed.
I do remember Campo. They were around for a couple of years in Huntsville, with one opening back in the mid 90s. I remember it being “nothing special” and seldom went there. We also had “Rex” back in the 1980s and 1990s. Rex and Circuit City used to seem similar, but over the years, Rex seemed to transition to all lower-end stuff, with Circuit City keeping some of the higher-end. In its final years, Rex seemed to stock hundreds of identical cheap TVs.
JohnE: I remember Campo very well. The current Conn’s location on Airline Hwy in Baton Rouge was a Campo store. I still have the 25″ Magnavox TV I bought at that Campo store in 1995, and it still works! I also bought my RCA Digital Satellite System there in 1996, and I still have it as well. I don’t use it no more because I have switched to digital cable, but the satelite dish is still attached to my house just in case I ever decide to go back to DSS. Almost all of the A1 stores in the New Orleans area, including stores in Slidell and Mandeville on the northshore, were Campo stores. Campo had at least one store in every major city in Louisiana before they went out of business in 2000 or 2001. This included stores in north and central Louisiana, one each in Alexandria, Shreveport, Bossier City and Monroe.
Did you know that Campo was back? In Metairie on Clearview Parkway right across from the Target in Clearview Mall there is a Campo appliance store. I believe it was opened by members of the Campo family that owned the original New Orleans stores, and I think it only sells appliances.
Silo was big too for awhile, they changed there name to Yes! right before they went out of business in the late 90’s. I did not ever buy anything from there that I could remember. My parents bought a few appliances and my brother bought a few small electronics from there.
I really liked Campo, it was a good store and the Baton Rouge store was always so busy, especially on friday and saturday nights. I was so surprised when they had announced they were closing all stores and going out of business. But I do remember when Circuit City opened that first Baton Rouge store in 1993, and reading in the local paper about it and thinking, wow this is cool. I had never heard of Circuit City until this BR store. There was a lot of exitement, and was really something new and hip because it was the first really big national electronics chain store in town. Circuit City just opened a brand new store in the newly built power center by the Mall Of Louisiana, so I knew the old Airline Hwy store would go. The huge Kenner store on Veterans Blvd opened a few months after the Baton Rouge store. And yes,the New Orleans East store on Bullard Ave never reopened after hurricane Katrina. It was surrounded by big box stores ToysRUs, Pep Boys, The Home Depot, SaveOCenter Supermarket and a shopping center anchored by Big Lots. All these stores and the shopping center were still open a few days before August 29,2005, but were shuttered for good after the storm, except for the Home Depot that is still open.
I realize right now this maybe a long shot, but I wonder if Fry’s would ever be interested in expanding eastward? I visited there Las Vegas Boulevard store & was blone away by what they sell there beyond electronics. I said to my self, it’s amazing that we don’t have anything like this in New York. For those who haven’t visited a Fry’s location I’ll try to discribe it.
Think of a big box store like an oversized Best Buy crossed with an ABC stores consept with clothing, food & beverages.
Perhaps our west coast readers can fill in the gaps on Fry’s & ABC stores.
Please HELP, thanks.
Maybe ShopKo could expand into southern California, New England, the Southwest, the East Coast, Florida, Texas, Alaska, and Hawaii in the next 10-20 years, if stores like Kmart and Sears close a few hundred locations.
Fry’s expanded into the Houston area in 2000. They have only opened up 3 stores that I know of. West road, I-45 & Kobayashi, and 59 southwest right outside of Beltway 8. They have been slow to expand here opening up the second 2 stores 5 years after the first store opened in Houston. With the credit markets being as crummy as they are right now, I would think that we will not see much huge expansion for a few years with any retail companies.
update circuit city today slashed 1000 jobs at corp hq in richmond.
ShopKo expanding might be a good idea. I could see them snagging a few Value City locations except in a few ghetto markets (a lot of VC stores are indeed in pretty ghetto areas).
When Value City bought out the Grandpa’s chain in St. Louis, after the stores were converted over, the ones that were in nicer areas were the first to go – Ballwin & St. Charles didn’t last long as Value City stores – seems like they carried a mix of merchandise designed largely to appeal to an African American clientelle, and it didn’t do good taking over a store that sold a lot of hardlines like paint and sporting goods.
I still really miss the Grandpa’s chain (originally Grandpa Pidgeons) – especially the one on the Rock Road in Bridgeton. They used to have a really cool neon sign that they got rid of in the 80s when they dropped “Pidgeon’s” from the name.
If I’m not mistaken, the demise of Value City, leaves ShopKo as the only regional discounter left…Sad.
Mike: Pamida is still around, and I don’t think they’re part of Shopko anymore.
Actually, ShopKo and and Pamida are two separate entities owned by Sun Capital Partners, inc. ShopKo has been independent from Pamida ever since. ShopKo is now becoming more like Kohl’s and Target. I still think ShopKo expanding into Ohio and Missouri with the acquisition of Value City is a good idea.
Shopko, Pamida, and Meijer would be the only three major regional retailers left if Value City goes under.
Shopko has a great selection of merchandise, BTW.
ShopKo’s had quite a long history, especially here in its homestate of Wisconsin, dating back to the early 1960s.
At one point in time, ShopKo was owned by the SuperValu conglomerate, the same folks who also ran independant supermarkets under their namesake SuperValu banner.
Of course, like most other discount chains the past decade, they’ve had to shed some things. Namely, Pamida (which they ran from 1999-2003, before (Shopko) going private again under ownership of Sun Capital )
Pamida I think, is what partly drove ShopKo down a little during the time they owned the chain. No offense to ‘small town’ shoppers who rely on the chain, but I think it hurt their bottom line. It was only when they finally shed Pamida, and also went private via Sun Capital’s buyout, could they have built up enough capital to finally start remodeling some stores, and building out entirely new ones. My local store was one of the first to be remodeled into the new format and it looks real nice.
Since Prange Way went belly-up in 1996, I’ve made ShopKo (along with Target) my mainstays if I need ‘essential’ items……household, grooming, and what not. Mainly because ShopKo’s home-base is still in Wisconsin, albeit, run by outside owners. Them and Kohls…..they’re a rather big deal for me, and I’d hate to see them go under.
As for ShopKo expanding, I wouldn’t hold your breath. With the economy the way it is right now…who knows? Personally I’d like to see them continue to strengthen their brand within the roster of stores they have presently (This will however, entail shedding unprofitable stores), then when things look upwards, try to expand from there. They’ve done a good job with the recent store prototype / remodeling program. (I do, for one, like their newest logotype over their old red/blue ‘block’ styled signage…..they were trying to copy other chains I think), thus making their remodeled stores more appealing.
I don’t see ShopKo advancing outside their home base for a long time. They put up a store in Peoria around 2001 and died within a couple of years. Is ShopKo related to Festival Foods (Flemings)? Peoria also got a Festival around the same time and it died too. Must have gotten too competative here since those stores along with 2 Wal-Marts, a Schnucks, and the Shoppes of Grand Prairie all opened at the same time. ShopKo eneded up being the loser.
I’m shocked, truly shocked!
Circuit City Stores, Inc. to Reorganize Under Chapter 11– Circuit City Remains Fully Operational and Open for Business – – Company Has Negotiated a Commitment for $1.1 Billion in Debtor-in-Possession Financing – – Company Intends to Build on Recent Efforts to Streamline the Company and Create a Stronger, More Competitive Business –
November 10, 2008
RICHMOND, Va., Nov 10, 2008 /PRNewswire-FirstCall via COMTEX/ — Circuit City Stores, Inc. (NYSE: CC) today announced that it has filed a voluntary petition for reorganization relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia (“Bankruptcy Court”) in Richmond, Va. The company plans to continue operating the business without interruption as management focuses on developing and executing a comprehensive corporate restructuring plan. Circuit City’s Canadian operations also will be seeking protection under the Companies’ Creditors Arrangement Act in Canada (“CCAA”).
In conjunction with the filing, Circuit City is seeking customary authority from the Bankruptcy Court that will enable it to continue operating its business and serving its customers in the ordinary course. The requested approvals include requests for the authority to make wage and salary payments and continue various benefits for employees as well as honor customer programs such as returns, exchanges and gift cards. In addition, Circuit City has negotiated a commitment for a $1.1 billion debtor-in-possession (DIP) revolving credit facility to supplement its working capital. The DIP facility replaces the company’s $1.3 billion asset-based credit facility and is being provided by the same lenders. The facility provides additional immediate liquidity while the company works to reorganize the business and will permit the company to pay vendors and other business partners for goods and services received after the filing.
Circuit City recently announced that it was taking certain actions to address the company’s financial condition and deteriorating liquidity position. Despite aggressive efforts to secure vendor support, vendor concerns about the company’s liquidity and ability to pay for its purchases in this difficult economic climate have escalated considerably since the company provided a liquidity update on November 3, 2008, further impairing the company’s ability to conduct business and provide service to its customers. Faced with the need to secure ongoing vendor support and to ensure adequate merchandise flow to stores during the important holiday season, the company has determined that it would be in the best interest of its stakeholders to file for reorganization relief under Chapter 11. Operating under the protection of Chapter 11 will provide the company’s vendors with assurances that they will be paid for merchandise the company receives post-filing so the company can be sufficiently stocked for the holiday selling season. Further, the company intends to create a restructuring plan that should allow Circuit City to emerge as a stronger business with an improved national distribution channel for its vendors and a more compelling offering for its customers.
The company recognizes that, to achieve these objectives, there is a critical need to create a more efficient chain with a streamlined cost structure. As previously announced, the company is in the process of closing 155 domestic segment stores. This week, the company took action to realign its regional and district support structure commensurate with the smaller store base, which will include approximately 566 stores when the domestic segment store closings are completed. As a further cost-saving measure, the company reduced its corporate headquarters workforce on November 7, 2008. These corporate, regional and district support reductions totaled approximately 700 positions and are in addition to the reductions resulting from the store closings. The store closings and support workforce reductions will result in a combined domestic workforce and store base reduction of approximately 20 percent.
Under the protection of Chapter 11, the company plans to build on these recent restructuring initiatives. Through the additional flexibility that the bankruptcy process provides the company to restructure its operations, the company will continue its real estate rationalization by taking immediate steps to reject the leases at its previously closed locations. Further, as part of its restructuring efforts, the company will continue to assess the productivity of all assets, review additional cost-cutting initiatives and explore strategic alternatives to maximize the value of the business.
James A. Marcum, vice chairman and acting president and chief executive officer of Circuit City Stores, Inc., said, “We recently have taken intensive measures to overcome our deteriorating liquidity position. The decision to restructure the business through a Chapter 11 filing should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and ultimately position the company to compete more effectively. In the meantime, our stores remain fully operational, and our associates are focused on consistent and successful execution this holiday season and beyond.
“We appreciate the support we have received from our lenders in the midst of such a tight credit market. With this support, we believe we have the opportunity to leverage our market position and the strength of our brand to restore Circuit City to solid financial footing,” continued Marcum.
“We understand how difficult the recent announcements have been on everyone at the company, and we recognize the changes personally affect many people. Further, we know 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,” concluded Marcum.
How much time until life support is removed?
I see where you’re coming from about ShopKo, Chip. I think that’s why retailers like Ames, Caldor, or Prange Way failed in the first place. When they entered other states outside their home base, they became losers in the end. Just think of Ames when they bought out stores like Zayre and Hills. They need to have the strength to survive. Right now, ShopKo is trying to build up that strength they need for when they do expand outside of their home base. They have a presence in 13 out of the 50 states stretching from Northern California/Pacific Northwest to the Upper Midwest and Wisconsin with a varying customer base in the Mountain States.
that’s it there done, you better put a fork in them their toast,i just really hope i can get either a 360 or a ps3 when they finally go under.
From the Richmond Times Dispatch
Circuit City gets $1 billion in credit: Bankruptcy expert: Vendors could hinder retailer’s recovery
Louis Llovio and Michael Martz
November 13, 2008
Nov. 13–Circuit City Stores Inc. finalized a $1.1 billion line of credit yesterday to fund its bankruptcy reorganization, but the turnaround effort could be hampered by disgruntled product vendors, a bankruptcy expert said yesterday.
The credit line will be used only to pay for products during bankruptcy, not for vendor debt for products purchased before the company declared bankruptcy on Monday, Circuit City said in a Securities and Exchange Commission filing yesterday.
Robert M. Lawless, a professor at the University of Illinois College of Law who specializes in bankruptcy law, said money owed to the vendors before Circuit City filed cannot be paid until it emerges from bankruptcy.
Vendors contacted by the Richmond Times-Dispatch yesterday about doing business with Circuit City either would not comment on their plans or did not return calls.
Hewlett-Packard Co. spokeswoman Ann C. Finnie said, “H-P is aware of Circuit City’s bankruptcy filing and will be managing its business with Circuit City appropriately given the news.”
Hewlett-Packard was listed as the largest creditor in Monday’s filing. Circuit City owes it $118.8 million.
“What I can tell you is that H-P is focused on delivering the best customer experience, which has long included allowing consumers to purchase technology products where and how they wish,” Finnie wrote in an e-mail. She did not respond when asked if Hewlett-Packard would continue to ship products to Circuit City.
Jeffrey L. Tarkenton, a lawyer representing computer-maker Gateway Inc., said yesterday that he had not confirmed that the company was making deliveries of its computer products to Circuit City. However, Tarkenton said, “I would expect that most vendors are going to start shipping.”
In an e-mailed statement last night, a Panasonic Co. spokesperson said, “It is unfortunate that Circuit City Stores Inc., one of the nation’s largest electronics retailers, has had to face this challenging situation. Panasonic hopes for Circuit City’s successful reorganization and recovery.”
At a hearing Monday, an attorney representing Panasonic said it would seek an injunction to prevent Circuit City from selling products that Panasonic had shipped to the retailer on a consignment basis. No request for an injunction could be found in a search of court records yesterday.
Circuit City owes Panasonic $13.2 million, according to bankruptcy filings.
The product vendors are owed a huge amount of money, said Gary Shapiro, president and chief executive of the Consumer Electronics Association, a trade group based in Northern Virginia that represents manufacturers, retailers and others related to the consumer electronics industry.
“What [the bankruptcy filing] does is it really hurts the people who sold product to Circuit City,” he said. “They will lose their money now when they really wanted Circuit City to survive. They stuck their necks out and gave them product.”
Circuit City has said it hopes to emerge from bankruptcy by March.
Shares of Circuit City, which are now traded over the counter after the New York Stock Exchange suspended its listing Monday, closed at 25 cents yesterday, up 12 cents. Contact Louis Llovio at (804) 649-6348 or LLLovio@timesdispatch.com
Contact Michael Martz at (804) 649-6964 or mmartz@timesdispatch.com.
Yes they are done, it’s a shame because I remember when Circuit City was oh so cool.
I remember the days when Circuit City was an interesting store. When I moved to Huntsville, AL in 1988, I thought it was great to be in walking distance of Circuit City when I lived on campus. The Circuit City was in a different place then and was very close to campus. They had a good selection of audio and video equipment from the low to middle-high end. Several of my audio/video components came from Circuit City. Circuit City later moved across University Dr. from Madison Square Mall and Best Buy came along right next to them.
The main thing that turned me against Circuit City was the DIVX thing they tried to pull to compete with and hurt DVD. It made me always prefer Best Buy when buying any new equipment.
Who wants a stillborn Circuit City? In Macon, GA south of Atlanta there is a store that hasn’t opened- and never will. It is near The Shoppes at River Crossing north of Macon. What will take its place, I wonder? Best Buy? Or maybe a decent cafeteria or a food court?
i’m sorry to see value city go, i could pick up a few good pieces of clothing there but it was mostly good for dinner plates and towels and shower curtains and low cost blankets and bedding. maybe the store was too big and needed to be smaller like ross stores. value city wasn’t any more “ghetto ” than ross stores which are expanding. i saw a shopko in eastern idaho that went out of business.
anyone remember a bradleys store? everything i liked has went out of business but the good part is i wont’ go into a kohls or target unless i absolutely have to and i buy nothing from walmart but food and personal products so i guess i’ll save money since if i don’t like a store i will buy nothing but what i have to there.
Bankruptcy judge approves Circuit City Stores financing
December 22, 2008
RICHMOND, Va. – Circuit City Stores Inc., the second-biggest electronics retailer in the United States, received final approval Monday for US$1.1 billion in financing in order to keep operating while it’s in Chapter 11 bankruptcy protection.
U.S. Bankruptcy Judge Kevin Huennekens approved the debtor-in-possession loans at a hearing in Richmond. The financing, which replaces a $1.3-billion asset-backed loan the company had been using, will be used to stock merchandise and pay employees.
Richmond, Va.-based Circuit City filed for bankruptcy protection last month as it faced pressure from vendors and consumers who aren’t spending. Its Canadian operations filed for similar protection.
Gregg Galardi, an lawyer for Circuit City, said that since filing for bankruptcy, the company’s sales have been hurt by the weak consumer spending environment and are down between 40 per cent and 50 per cent.
Galardi called the financing and restructuring efforts a “bridge to somewhere” and said the company is still pursuing the sale of all of its assets.
Circuit City, which has posted losses for seven of the last eight quarters, plans to keep operating while it develops a reorganization plan to deal with significant declines in traffic and heightened competition from rival Best Buy Co. and others.
Circuit City spokesman Bill Cimino said in an emailed statement that the company is improving its gross margin rate, which is helping to offset lower sales.
The judge also approved a motion to void severance agreements with about 40 former employees, including Philip J. Schoonover, who stepped down as chairman, president and CEO in September. Several employees were granted time to file objections because they had not received adequate notice. Employees can still seek payments like other creditors in the case.
Circuit City also was able to break service agreements with Google Inc. and National Service Alliance Inc., and hotel reservation contracts with the MGM Grand Hotel & Casino in Las Vegas and The Jefferson Hotel in Richmond.
The company said the contracts were “financially burdensome and unnecessary,” according to court documents. The court filings did not say how much Circuit City would save by voiding the contracts.
Schoonover, who was replaced by vice-chairman and acting president and CEO James A. Marcum, was expected to receive at least $1.8 million in a severance deal after resigning from his post, according to regulatory filings.
The judge also said he would rule at a Jan. 29 hearing on whether Circuit City could break the leases for all but one of the 155 stores it plans to close this month. The company cancelled an auction of the leases last week because it received too few bids. Monthly expenses for those leases are about $6 million, according to court documents.
Circuit City now plans to break a total of 304 leases. That includes 150 leases it had already received approval to break earlier this month for places where it no longer operates stores, which the company said cost $40 million annually.
Circuit City announced plans in early November to close 155 of its more than 700 U.S. stores by Dec. 31 and lay off about 17 per cent of its domestic work force, or up to 7,300 people. The affected stores are spread across 28 states, including multiple locations in Phoenix, Atlanta and other areas.
The company, which said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31, hopes to emerge from court protection in the first half of next year. At that point, it could seek a buyer or operate on its own again.
@Chip, At least they are alive and well in the Springfield area. Wal-Mart must have a monopoly of sorts in Peoria. ShopKo is not related to Festival Foods, but ShopKo used to be a division of SuperValu Foods. I would compare ShopKo to Bradlees as both did partner up with supermarket chains in the 1970s, only to break up decades later and go their separate ways, with the discount stores going upscale for much of the 1990s. ShopKo was a division of SuperValu around the same time Bradlees was a division of Stop & Shop, in the 1970s.
@Matt from WI, I most certainly agree with the idea of ShopKo expanding in their home base, there are so many communities in the area that do not have a ShopKo yet, as of 2009.
I’ve come up with two examples:
Shawano, WI
Menominee, MI
I’m slowly seeing the red/blue “Crillee font” signs being phased out on the ShopKo stores in my area, in favor of their new logo, featuring a New Yorker-esque font in a chocolate brown color.