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Circuit City Going out of Business?

Folks – For those of you who have been reading this blog all year, you are probably familiar with the stories I have posted about Circuit City and the constant rumors about whether they are going to stay in business or not.  In April 2008, I predicted in this piece that of all the retailers that are struggling, Circuit City, together with Linens ‘n Things, The Gap, Sears, Kmart, Pier 1, and Office Depot are likely to go bankrupt. Well, unfortunately, some of this is coming to pass. Linens ‘n Things is going out of business and it looks like Circuit City may not be too far behind.

I am putting Circuit City in this category because the company has yet to find an answer to Best Buy. In May, I posted this story about problems at Circuit City and the offer from Blockbuster to merge the two companies. Since then, the company has missed earnings and has been laying staff off. But the problem seems to be the business model, which has yet to be fixed to better compete with rival Best Buy.

The current economic crisis has made things worse and according to this story from Reuters, the company is planning to close 150 stores and lay off thousands of workers. Whether this will stop the bleeding is anybody’s guess. So, if you currently hold a gift card from Circuit City, I strongly urge you to use it NOW! There is a real possibility the company may have to file for bankruptcy and you don’t want to be left with worthless gift cards.

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2 Comments

  1. Brent Richards

    Hi Kwame. Great blog! I don’t have an extensive knowledge of the financial industry, however, I believe there is a difference between a company going out of business and a company filing for bankruptcy? In your initial post you stated that Circuit City is amongst your list of companies going out of business. Circuit City filed for chapter 11 bankruptcy, however, I believe it does not necessarily mean that they are going out of business.

  2. GiftCardBlogger™

    Brent, you are right. Circuit filed for bankruptcy reorganization. However, there have been rumors about a possible liquidation all year. I don’t think they will get to that point but in today’s economy, you never know. But yes, Circuit plans to reorganize and stay in business.

    Thanks for your comment.

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