DEL.ICIO.USUpdated: 11:54 a.m. November 04, 2008
Circuit City to close all 16 Atlanta locations
The Atlanta Journal-Constitution
Monday, November 03, 2008
Goodbye, Circuit City. Hello, Wal-Mart, Best Buy and Apple Store.
Welcome to the new consumer electronics landscape after Circuit City announced it will pull out of the Atlanta market.
Circuit City, the 60-year-old Richmond-based consumer electronics chain that also founded CarMax, is succumbing to the current economic climate and could be close to bankruptcy, according to Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting and investment banking firm in New York.
“If you’re Best Buy or Wal-Mart, you’re celebrating,” said Davidowitz, who believes Circuit City could be on the verge of following Linens ‘n Things, Value City, Shoe Pavilion and Mervyns into bankruptcy and liquidation.
On Sunday, Circuit City announced it will close all 16 Atlanta stores and stores in Macon, Warner Robins and Athens.
Georgia will have only two Circuit City stores left — in Rome and Columbus.
On Wednesday, all Atlanta stores will begin liquidating their inventory. Stores in Atlanta will be closed today to prepare for the liquidation, said Circuit City spokesman Bill Cimino. He said stores will go out of business as they exhaust their inventory, most likely by the end of the year.
Customers are being asked to pick up any items in the stores that were being repaired.
In the future, customers with warranties, gift cards and store credits will need to contact Circuit City through its Web site, the toll-free number or through other stores (though the nearest one will be 60 miles from Atlanta).
In all, Circuit City is closing 155 stores and abandoning 12 U.S. markets. That represents about 17 percent of its work force and 22 percent of its U.S. stores.
Another 565 Circuit City stores will remain open in the United States.
The $11.3 billion chain was unable to maintain enough credit to stock its stores for the holidays at the same time that slow consumer spending cut into sales, the company said Sunday.
Davidowitz, however, believed Circuit City’s issues started 15 years ago when it founded CarMax. Circuit City was the largest consumer electronics retailer.
“But while they were building their auto business and pouring all their money into it, good ol’ Best Buy kept their head down and now has more attractive stores, better locations and better service, like its Geek Squad,” said Davidowitz.
He likened it to Atlanta-based Home Depot, which took its eye off its stores to found HD Supply (a division it sold last year) while Lowe’s crept up in market share.
(CarMax was spun off and now is a public company.)
“It doesn’t take a lot of bad decisions to ruin a retail chain,” said Davidowitz.
The changes have been swift — all Atlanta locations already have been removed from Circuit City’s online store locator, and online customers were being referred to the phone and Web. The stores will stay open during liquidation.
Circuit City emphasized that its warranties are secured by third-party financial institutions, such as GE Capital.
Circuit City employees, however, aren’t as lucky. They are not being offered a severance package.
Richfield, Minn.-based Best Buy has 28 stores in Georgia and could get a windfall from Circuit City’s customers.
Davidowitz said that the biggest winner in electronics right now is Apple, which has the “highest productivity” in sales, for an average $2,000 a square foot at its stores, followed by Best Buy’s $800 a square foot. Wal-Mart, he said, is now quietly gaining ground, carrying more electronics.
Meanwhile, CompUSA is closing all its stores, and Tweeter is in bankruptcy.
Still, it may seem odd that Circuit City would close stores in Atlanta, a sought-after retail market with a young and affluent population. In the end, it comes down to simple math, said another retail expert.
“Obviously, there were not enough people shopping at Circuit City for them to keep the stores open in Atlanta,” said Randy Stuart, an assistant marketing professor at Kennesaw State University’s Coles College of Business.
Circuit City said the stores it is closing generated approximately $1.4 billion in net sales in the last fiscal year, but on average had lower net sales, lower gross profit margin and were unprofitable when marketing expenses were compared to store results.
Circuit City stock closed Monday at 35 cents a share, up 9 cents.
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Comments
By Sandi
Nov 6, 2008 11:13 AM | Link to this
Wow, anyone who thinks that Obama winning the presidency is an end to racism in America needs to talk to Sharon or Gettin' PAID. Why are you so angry? Is it because you see yourself as a dying breed? Obama supporters weren't only African Americans, there's no way he would have won on their support alone, they're your children, nieces, nephews, the young hopefuls who aren't saddled with the hatred you spew & saw what 8 years of Bush has done to 95% of us. Obama got 52% of the popular vote and I'm told Blacks are 15% of the US population, you do the math.
And David, bye-bye jobs? Haven't you noticed the current state of the economy? Almost 400,000 people are unemployed in GA alone! Can't blame that on the President-Elect.
I'll pray for all of you.
By Just me
Nov 5, 2008 4:17 PM | Link to this
Some of these comments show just how intelligent some people are. Maybe you should take a moment to think about why the economy is the way it is now. Maybe it is because of all the RICH people who are greedy and making bad business decisions while under the leadership of a REPUBLICAN PRESIDENT (BUSH). The last eight years have been awful and all we have to show for it is high foreclosure rates, hight unemployment rates, a war that is costing us BIllIONS and a TERRIBLE ECONOMY.. Don't forget the Bailout for Wall Street. So don't go blaming jack on OBAMA and my race! Check yourself!
By Bill Magliocco
Nov 5, 2008 10:44 AM | Link to this
I must agree that Circuit City made stupid moves that caught up with them. At least in ATL, the only time I would shop them was on Black Friday for a deal or two.
Canning your senior staff was a move that only made things worse for the shopper.
I think they pulled out of ATL first due to the brutal level of in-market competition from Fry's, MicroCenter and HH Gregg, as well as Best Buy. You may recall Comp USA pulled out of this market early only to fail completely about a year later. Same issues, folks.
At the rate things are going for CC, it would not be a surprise to see them file for ch. 11 right after the holidays and shut down totally in a year.
By S. C.
Nov 4, 2008 10:00 PM | Link to this
Is anyone surprised?
I remember shopping at sorry a Circuit City over 20 years ago when it was at Greenbriar Mall. I can remember a time of returning a typewriter 2 times and finally getting a decent one on the 3rd shot! They have ALWAYS had defective products, which has always made me believe that their products were purchased from a secondary electronics foreign market other than a market of reasonably reliable products; they have ALWAYS had horrible customer service, as it as the norm to walk around in the Newnan, GA store for upwards of 30 minutes before anyone even offers assistance; and their selection was never overwhelmingly exciting, new or fresh! So, the roosters have come home to hatch. They deserve to fail!
Thanks Best Buy for selling me 2 Ipods, 1 stainless steel stove, 1 refrigerator, 1 Wii game, 4 Wii game cartridges, 1 digital camera, for servicing 2 computers, for taking back my printer w/no hassle when I decided I didn't like it, for always having employees eager to serve me and who are knowledgeable about your products, all of this w/in 1 year! I am good to those who are good to me!
Glad I didn't get my HDTV from Circuit City. Geez, I'd probably be missing the election results by now!
By RBG
Nov 4, 2008 6:38 PM | Link to this
good riddance! I can see why they are bankrupt! I would go into the Lenox store with something particular in mind. I would walk and walk and walk around the store while most of the employees talked with each other and watching the wide screen tvs. I would usually leave the store without buying something because nobody would help me. Maybe il buy one of those tvs for pennys on the dollar....
By Gettin' PAID !
Nov 4, 2008 4:14 PM | Link to this
BEST BUY and HH GREGG have now each submitted a press release today to proclaim that Atlanta-area "Obama Backers" who previously stole all their electronics needs from CIRCUIT CITY would now be welcome to come shoplift from their stores.
WOW! It really is turning out to be a great day for those who blindly love them some Obama.
By David H
Nov 4, 2008 2:43 PM | Link to this
And just wait until the Obama union goons ram unionization on Walmart. Bye-bye jobs, bye-bye low prices, bye-bye another significant employer in the Atlanta area. (At least we evil rich people won't have to worry about it.) Circuit City is just closing shop early. Get used to it, and when you lose your job, please don't whine to me-you were well warned!
By thirdmaster
Nov 4, 2008 2:42 PM | Link to this
Sharon: you are an idiot. People like you make it bad for all the mccain/palin/chambliss supporters.
Grow up !!
By Sharon
Nov 4, 2008 1:37 PM | Link to this
WIth CIRCUIT CITY closing, where will all the OBAMA VOTERS in Atlanta steal their electronics from now?
By Cheryl
Nov 4, 2008 12:53 PM | Link to this
What about the Augusta store? We have one here. Is it closing also?
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