Another Big Empty Box
By Pasadena Independent
Published: Thursday, March 26th, 2009
Just a few months ago, on June 26th of last year, business-minded Monrovians celebrated the arrival of the town’s newest big box store, the Circuit City on Huntington Drive. Now, a market crash and a Madoff later, the national electronics retailer decided on Friday to shutter all 567 of its stores nationwide. That translates into 34,000 jobs lost across the country – nearly 5,000 of those coming from the retailer’s 75 California-based locations.
At first, Circuit City had announced its application for Chapter 11 bankruptcy protection and its plans to close only some of its underperforming stores. Every store in Georgia, for example, was scheduled to close, while East Pasadena’s Rosemead Blvd. location and the new store on Huntington had made the cut.
“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,” says the company web site, which has been replaced with a bleak Dear John press release.
The company does not anticipate any value will remain from the bankruptcy estate for the holders of the company’s common equity, although this will be determined in the continuing bankruptcy proceedings. As for those low or negative yield corporate bonds known as gift cards, the company is clear: “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.”
Consistent with federal labor laws, Circuit City employees 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.
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. Currently, the local stores are offering discounts ranging from 10-30 percent, though we were hard pressed to find much of anything worth having at a discount deeper than the lower side of that range.
In fact, many customers drawn to the sale by street side sandwich board marketers on Monday were visibly and vocally disappointed by the paltry discounts. With profit margins in the retail business typically including at least a 40 percent initial markup, most consumers would seem to prefer waiting for more drastic cuts before spending their evermore scarce greenbacks.
By John Stephens
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