The LIQUIDATION SALE starts today at CIRCUIT CITY, the largest retailer to be upended by the widening financial crisis, yet another hit to a local economy pounded by the bankruptcies of two department stores -- Mervyns and Gottschalks.
span style="font-weight:bold;">CIRCUIT CITY announced Friday it would close its 567 stores in the U.S., including one in Santa Cruz County, after attempts to sell the business failed.
"Very, very sad," said Alan L. Wurtzel, son of company founder Samuel S. Wurtzel and himself a former chief executive of Circuit City. "I feel particularly badly for the people who are employed or until recently were employed."
"Since my childhood, that's been where you go to buy electronics - Circuit City," said 37-year-old Sonya Webb, who was standing outside a store in Chattanooga, Tenn., watching as an employee set a 46-inch Sony television in her car.
The nation's second-biggest consumer electronics retailer has more than 30,000 employees.
span style="font-weight:bold;">CIRCUIT CITY had been seeking a buyer or a deal to refinance its debt, but the credit crunch and consumer cutbacks proved insurmountable. Negotiations extended past midnight Thursday, then fell through, Circuit City lawyer Gregg Galardi said.
Two potential buyers -- Mexican billionaire Ricardo Salinas Pliego, who controls a chain of electronics stores in Latin America and the Golden Gate Capital private equity firm -- considered downsizing to 180 to 350 stores. But span style="font-weight:bold;">CIRCUIT CITY couldn't secure financing or vendor support.
"This is the only possible path for our company," acting Chief Executive James A. Marcum said.
U.S. Bankruptcy Judge Kevin Huennekens approved the liquidation plan Friday afternoon, allowing closeout sales to start today at some stores, including the county store.
"This is bad news for the local economy," said Michael Hutchison, economics professor at UC Santa Cruz. "It will result in a loss of employment, fall in sales tax revenues
and less consumer choice. It's not clear that these sales will stay in the county or go to large discount stores in San Jose. This recession is hitting virtually all sectors of the economy and is getting worse."
But Lyle Troxell, host of the Geek Speak show on KUSP-FM radio, contended span style="font-weight:bold;">CIRCUIT CITY's demise is not a big loss.
"I would go to Fry's in San Jose or Santa Cruz Electronics, which has great customer service," he said. "You can get cables for less at an office supply store. span style="font-weight:bold;">CIRCUIT CITY has a large collection of movies, but you can get that online. For a large format TV, Costco is a better bet."
Troxell said selling technology is tough because it doesn't work for the vendor to stock equipment. New products come out every six months so if the products in stock aren't sold by then, they become obsolete.
Bryan Rudisill, 20, a manager for Circuit City in Santa Cruz, worked there for three years. He is thinking of moving to Long Beach because he sees more opportunities there.
span style="font-weight:bold;">CIRCUIT CITY opened a 27,000-square-foot store on Commercial Way with 75 employees in 1997. The county invested $2 million in the project. Then-redevelopment director Tom Burns said the location could attract Toys "R" Us and span style="font-weight:bold;">CIRCUIT CITY, which it did, create jobs and bring in $450,000 a year in sales taxes.
Friday afternoon, the Santa Cruz Circuit City wasn't empty but it wasn't packed either. Sister Mary of the Salesian School in Corralitos carried in her laptop, hoping someone could help her resurrect the 60-page booklet she was working on to commemorate the order's centennial.
Capitola resident Alberto Garcia wanted to make an exchange. He had received a letter about the company's financial woes, but he hoped the Santa Cruz store would stay open.
Betty Kaiser of Santa Cruz needed to replace a broken monitor but she came away with a Toshiba 32-inch TV for $600, saying, "It was a very good price."
span style="font-weight:bold;">CIRCUIT CITY's plans to close disappointed Glenn Petersen, who had driven from Watsonville with his daughter.
Last fall, shoppers defected to Best Buy, the nation's largest electronics retailer, when it opened a big store on 41st Avenue.
Darrell Long, a computer science professor at UC Santa Cruz, called span style="font-weight:bold;">CIRCUIT CITY and Best Buy largely interchangeable.
"With all the technology in Santa Cruz, it's a shame we don't have a store that fills that niche," Long said.
County Supervisor John Leopold, a span style="font-weight:bold;">CIRCUIT CITY customer, said, "I didn't realize they were that close to the edge."
He has asked the county redevelopment director to assign someone to work on economic development.
"We need to be building a mix of businesses," he said. "You don't want to have all big-box stores. Locally owned business have the ability to survive a downturn in a way that chains don't."
span style="font-weight:bold;">CIRCUIT CITY said liquidating the stores should last through March, after which they will close.
The company's inventory has a retail value of about $1.8 billion, said James Schaye, president and CEO of Hudson Capital Partners, the liquidator. He said sales will begin with up to 30 percent discounts and will be adjusted as the LIQUIDATION continues.
span style="font-weight:bold;">CIRCUIT CITY stock fell below $1 on the New York Stock Exchange in September and the company was notified Oct. 24 that it could be delisted. In 2000, before the dot-com bust, the stock had been as high at $58.
Circuit City filed for Chapter 11 in November as vendors started to restrict the flow of merchandise. It had been exploring its options since May, when it opened its books to Blockbuster Inc. The Dallas-based chain made a takeover bid of more than $1 billion, but withdrew the offer in July.
Circuit City said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31. Under court protection, it broke 150 leases at locations where it no longer operated stores and closed 155 stores in the U.S. in November and December.
Here is the Notice from the CIRCUIT CITY WEBSITE
Circuit City would like to thank all of the customers who have shopped with us over the past 60 years. Unfortunately, we announced on January 16, 2009, that we are going out of business.
Please check back later for updates about the status of our website. In the meantime, we hope the information below will help answer most of your questions.
What's going on at Circuit City?
* Due to challenges to our business and the continued bleak economic environment, Circuit City is going out of business and the company's assets will be liquidated to pay off creditors.
* The process was extremely difficult and we were left with no other choice but to liquidate. Circuit City had a proud heritage of serving the public for 60 years and we deeply regret the impact this decision will have on our associates, our customers and the communities where we have operated stores and other facilities.
* We had hoped to be able to emerge from Chapter 11 bankruptcy protection as a stronger, more competitive company and we made significant progress during the reorganization to improve our business. Unfortunately, the economic climate is so poor that we have no choice other than liquidation.
* Liquidators will start arriving in our 567 stores across the U.S. over the weekend, and closing sales will start as early as Saturday, January 17. Closing sales will run as long as it takes to sell existing inventory, but are expected to wrap up by the end of March. When the liquidation sales are completed, the stores will be closed.
* At the company's corporate offices in Richmond, Virginia, a small staff will remain on duty during the completion of the liquidation process; most associates will be relieved of their duties immediately.
* Consistent with federal labor laws, Circuit City associates are receiving 60-days notice of the termination of their employment. Those who stay on to help with the liquidation, of course, will receive pay and benefits. Those who are dismissed earlier will be receiving pay and benefits for the 60-day period beginning January 16, 2009.
* Associates at our company headquarters will be asked to come back on Monday, January 19, to find out more about their status and to retrieve their personal belongings.
Are you also shutting down your operations in Canada?
* No, our Canadian operations will continue. They are not affected by the liquidation of Circuit City's U.S. operations. The Canadian operations employ approximately 3,000 associates.
How many people are losing their jobs as a result of this action?
* Circuit City employs approximately 34,000 associates in the U.S.
Can you provide some background on Circuit City?
* Founded in 1949 as the Wards Company, Circuit City is headquartered in Richmond, Virginia. At the time of the liquidation announcement (January 16, 2009), the company operated 567 stores in 153 media markets in the U.S. and approximately 765 retail stores and dealer outlets in Canada.
* For a timeline history of the company, go to http://investor.circuitcity.com, and click on Company Information.
Will Circuit City stores continue to accept Circuit City gift cards?
* Yes, customers holding Circuit City gift cards may redeem them at full value at our stores during the liquidation sales. Once the stores are closed and the company is out of business, the gift cards will have no value.
Are Circuit City's extended warranties affected by the liquidation?
* No. Circuit City Advantage Protection Plans® (extended warranties) have been backed by third-party independent companies for more than 15 years and as a result, are not impacted by Circuit City's closing.
* Currently, all Circuit City Advantage Protection Plans are fully backed by the Assurant Solutions companies. Assurant Solutions operates as Federal Warranty Service Corporation, Sureway, Inc., and United Service Protection, Inc. Assurant Solutions is part of Assurant, Inc. (NYSE: AIZ), and its extended service contacts are backed by an Assurant insurance subsidiary rated A "Excellent" by A.M. Best Co.
When will the liquidation sales begin?
* Liquidation sales begin as early as Saturday, January 17, 2009, and will last as long as it takes to sell through the merchandise at each of the stores. We expect the sales to wrap up by the end of March 2009.
How much will merchandise be marked down, and can customers negotiate prices for the merchandise?
* There will be clearance pricing, but specific discounts are not being announced. All sale prices are at the discretion of the liquidator. Prices are non-negotiable and all adjustments must be approved by the liquidator's on-site managers.
What payment types will be accepted at the liquidation stores?
* Stores in liquidation will accept cash, Circuit City gift cards and most credit cards. Personal checks will not be accepted. All sales are final.
Will Circuit City's price matching policy or the One Price PromiseSM apply during the liquidation sale?
* Because the liquidation company is in charge of the sales at the closing stores, their policies are in force. So, One Price Promise does not apply during liquidation events, nor does the company's Unbeatable Price Guarantee. All sales are final.
What about returns and refunds?
* Customers can return products they purchased prior to January 16 for a 14-day period for exchange or refunds. All other terms of return policy are in force.
* When closing sales begin on or around January 17, 2009, all sales will be final.
Will delivery service be available for products purchased from liquidation stores?
* No. Unfortunately, we will not be able to provide delivery services for products purchased from liquidation stores.
Will Circuit City offer home theater installations during the closing sale?
* Yes, we will continue to offer home theater installations during our closing sales.
Will Circuit City offer PC services and repairs at liquidation stores during the closing sale?
* Services already underway at the liquidation stores will be completed promptly, but no additional jobs will be accepted at these stores.
Will car electronics installations be available at liquidation stores during the closing sale?
* No new car installations will be offered.
Will Circuit City's extended warranties still be available on products purchased from liquidation stores?
* Yes, we're making no changes to our Circuit City Advantage Protection Plans®. Coverage is national and purchases will still be protected just as they always were.
* Circuit City Advantage Protection Plans® have been backed by third-party independent companies for more than 15 years and as a result, are not impacted by Circuit City's bankruptcy or liquidation.
* Currently, all Circuit City Advantage Protection Plans are fully backed by the Assurant Solutions companies. Assurant Solutions operates as Federal Warranty Service Corporation, Sureway, Inc., and United Service Protection, Inc. Assurant Solutions is part of Assurant, Inc. (NYSE: AIZ), and its extended service contacts are backed by an Assurant insurance subsidiary rated A "Excellent" by A.M. Best Co.
What if a customer purchased products at one of the closing stores and the product needs service?
* For products covered under the manufacturer's warranty, customers should call the manufacturer.
* For products covered under Circuit City Advantage®, guests can call the toll-free number that is printed on the bottom of the product receipt.
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