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Discounts at closing stores: Circuit City hires firms to liquidate inventory at 155 stores; three are in Virginia
(Richmond Times-Dispatch (VA) Via Acquire Media NewsEdge) Nov. 6--Circuit City Stores Inc. revealed discounted pricing at the 155 stores it is closing.
The company would not disclose how much the discounts were, but one analyst reported 10 percent discounts on all products except Bose items at the Manhattan store that will close. An employee at the Charlottesville store that will close said it had the same discount.
The Henrico County-based consumer electronics retailer announced Monday that it was closing 21 percent of its stores and liquidating that inventory. The chain is trying to streamline its operations as it strives to turn itself around. It also is laying off 17 percent of its work force -- about 7,200 employees.
Three of Virginia's 26 stores are closing -- in Charlottesville, Manassas and McLean.
Circuit City hired Gordon Brothers Group LLC and Hilco Merchant Resources LLC to handle the liquidation at 154 of the stores. Circuit City will handle the remaining store, but it did not disclose which one it is.
From the proceeds, the liquidation companies will pay Circuit City 72 percent of the cost value of merchandise, the chain said in a Securities and Exchange Commission filing yesterday.
The liquidators will oversee pricing at stores, Circuit City said. The chain's "one-price promise" and "unbeatable price guarantee" programs do not apply at the stores being closed. Nor are items bought online available for pickup at these stores.
Circuit City said it hopes to wrap up the sales by the end of the month.
While some experts have expressed concern that consumers may not shop at Circuit City stores that are closing, David Urban thinks customers will take advantage of lower prices.
"You will see people shopping there because of the deals," said Urban, a professor of marketing at Virginia Commonwealth University.
Any concerns about not being able to return a purchased product could be dismissed by the fact that most manufacturers warranty what they sell, he said.
Christopher Horvers, an analyst for JPMorgan Securities, said in a note to investors yesterday that price drops could hurt sales at Best Buy Co. locations near the closing Circuit City stores.
Earlier in the week he reported that 85 percent of the Circuit City stores closing were within 5 miles of a Best Buy.
"In fact, our biggest concern in the near term for Best Buy is whether the scenario shifts prices lower across the board," he said.
Shares of Circuit City closed at 27 cents yesterday, down 7 cents.
Contact Louis Llovio at (804) 649-6348 or LLLovio@timesdispatch.com.
To see more of the Richmond Times-Dispatch, or to subscribe to the newspaper, go to http://www.timesdispatch.com.
Copyright (c) 2008, Richmond Times-Dispatch, Va.
Distributed by McClatchy-Tribune Information Services.
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