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Circuit City may close 150 stores, slash jobs 7:51 AM CT
07:58 AM CDT on Monday, October 20, 2008
Associated Press
NEW YORK – Circuit City Stores Inc. is considering closing at least 150 locations and slash thousands of jobs to avoid filing for Chapter 11 bankruptcy protection, a report said Monday.
A report in The Wall Street Journal said people familiar with Circuit City's plans said the store closings and job cuts could allow the retailer to liquidate $350 million in inventory that could be used to pay real-estate costs, including leases on abandoned sites.
Circuit City, the nation's second-largest consumer electronics retailer, could then try and renegotiate leases with existing landlords, the report said.
Earlier this month, Circuit City hired Skadden, Arps, Slate, Meagher & Flom LLP as its bankruptcy counsel, according to people familiar with the matter. The firm has assisted the Chapter 11 reorganization of Kmart, which is owned by Sears Holdings Corp.
Circuit City also hired FTI Consulting Inc. to develop a turnaround plan and has retained investment bank Rothschild Inc. to lead discussions with banks and acquire emergency financing, sources said.
Last month, Circuit City replaced its chief executive and withdrew its outlook for the full year because of traffic declines, stronger competition and a weak brand on the heels of a wider second-quarter loss. Circuit City has posted only one profitable quarter since the second quarter of 2007.
In May, Circuit City said it hired Goldman Sachs & Co. to explore strategic options, as Blockbuster Inc. made a takeover bid of more than $1 billion. Blockbuster later withdrew its bid in July because of market conditions.
So far this year, shares have lost 90.7 percent of their value.
A representative for Circuit City could not be immediately reached to comment.
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07:58 AM CDT on Monday, October 20, 2008
Associated Press
NEW YORK – Circuit City Stores Inc. is considering closing at least 150 locations and slash thousands of jobs to avoid filing for Chapter 11 bankruptcy protection, a report said Monday.
A report in The Wall Street Journal said people familiar with Circuit City's plans said the store closings and job cuts could allow the retailer to liquidate $350 million in inventory that could be used to pay real-estate costs, including leases on abandoned sites.
Circuit City, the nation's second-largest consumer electronics retailer, could then try and renegotiate leases with existing landlords, the report said.
Earlier this month, Circuit City hired Skadden, Arps, Slate, Meagher & Flom LLP as its bankruptcy counsel, according to people familiar with the matter. The firm has assisted the Chapter 11 reorganization of Kmart, which is owned by Sears Holdings Corp.
Circuit City also hired FTI Consulting Inc. to develop a turnaround plan and has retained investment bank Rothschild Inc. to lead discussions with banks and acquire emergency financing, sources said.
Last month, Circuit City replaced its chief executive and withdrew its outlook for the full year because of traffic declines, stronger competition and a weak brand on the heels of a wider second-quarter loss. Circuit City has posted only one profitable quarter since the second quarter of 2007.
In May, Circuit City said it hired Goldman Sachs & Co. to explore strategic options, as Blockbuster Inc. made a takeover bid of more than $1 billion. Blockbuster later withdrew its bid in July because of market conditions.
So far this year, shares have lost 90.7 percent of their value.
A representative for Circuit City could not be immediately reached to comment.
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