Reports: Circuit City Could Close 100’s of Stores

Fresh off of the news about Mervyns’ collapse, we’re seeing reports out there that Circuit City could close, at worst, hundreds of stores after the holiday season. Most estimates have the electronics retailer at least shutting 150 units.

This isn’t too big of a surprise. Just last month executives said that they were halting any new store openings for 2010. The chain was also nearly purchased by Blockbuster earlier this year in a potentially head-scratching deal.

Is the electronics segment truly a one-specialty-chain show with Best Buy at the top of the heap. Circuit City has struggled to keep up with its rival, and now some analysts are saying that the company’s downsizing could actually help Best Buy.

“We think there will be a pretty significant transference of sales from closed Circuit City stores to Best Buy,” said FTN Midwest Securities analyst Anthony Chukumba, in a Reuters article. “In addition to that, we think Best Buy’s gross margins would benefit because they would have increased leverage with suppliers.”

Best Buy’s sales are holding up, and it’s expansion has not slowed all that much, but how long can that chain keep it up? Either way, Circuit City’s news can’t bode well for landlords.


8 Responses to “Reports: Circuit City Could Close 100’s of Stores”

  1. 1 Jeff Green October 21, 2008 at 2:25 pm

    Ian: It’s a crazy time…but I think Circuit City will close over 300 after Xmas. That’s my guess.


  2. 2 Steve October 21, 2008 at 3:46 pm

    Not sure this ‘bodes well for landlords’…closings of struggling retailers can go both ways, but would appear as a detriment right now to landlords with already decreasing occupancy numbers.

    As for the closing of 300 stores after Xmas, yes, that is a guess. Closing 40% of their stores will likely not happen in one swoop, would not be logical unless they are liquidating.

  3. 3 Jason Bollhoefner October 21, 2008 at 4:31 pm

    How would the closure of these stores bode well for the Landlords involved? I’m not seeing much upside in the retail sector for such spaces with retenanting likely to be a challenge….

  4. 4 iritter October 22, 2008 at 6:27 am

    Jason and Steve-

    Thanks for calling out the typo.
    I meant “can’t bode well for landlords.”
    The change has been made.

  5. 5 TeenyTiny October 22, 2008 at 11:43 pm

    Take the bottom two players of every retail category, and count on them not being around in 5 years. Do the same thing for the bottom two highly leveraged Landlords of different venues (Lifestyle, Malls, Grocery Anchored centers….), they won’t be around either in 2013.

  6. 6 Joe October 24, 2008 at 8:40 am

    I worked for Circuit City for over 19 years and bailed out about five years ago when the company started making questionable decisions like bringing on Schoonover (Ex Best Buy Guy) where he and his Best Buy cronies edged out all of the old CC folks.
    What did it get CC? .29 cent stock. The word from within is that they plan on closing whole markets. Just Like Mark did when he bought back Ultimate Electronics. Oh that’s right, The acting CEO is one of Mark’s boys!

  7. 7 little nat October 24, 2008 at 8:46 am

    I think the cleansing (fewer stores) is good for the industry . The people at the top forget the employees and customers and only watch the NYSE. They forget customers that make the business and they forget to train the employees how to communicate. Most machines fall apart if you do not maintain them . Time to bring Mr. Sharp back to the big office.

  8. 8 James October 27, 2008 at 9:15 am

    Americans are over loaded with “stuff”, much of it junk, and or shallow,status driven non-necessities. I think a new frugality is emerging that will be felt for a long time. Spontaneous and indiscriminate spending is a thing of the past. As people place more value on their money they will expect more from retailers not only in price, but just as importantly, in quality products and customer service.
    Retailers who can deliver all three components will still be around and they will prosper through this downturn.
    Americans are struggling to toward a new national identity and I believe this shift in perception will markedly change the way we shop and the products and services we demand.
    Hang on for the ride it will be a good one!

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