LayoffBlog.com

January 20, 2009

Circuit City’s death traced back to layoffs

Filed under: Retail,US — 7macaw @ 7:37 am
Tags: , ,

As the second-largest electronics retailer after Best Buy, Circuit City was once well-positioned.

But most experts point to the chain’s 2007 layoff of thousands of its highest-paid – and most experienced – sales clerks as the start of its rapid descent. Many went to Best Buy, which consistently ranked higher in customer service scores in recent years.

“Circuit City miscalculated when they decided that price was the ultimate factor in customers’ choice of electronics retailers,” says Robert Richardson, president of Associates Interactive, which specializes in retail training programs. “As a result, they suffered immensely … and ultimately became vulnerable to multiple-category retailers and wholesale clubs with better prices, as well as competitors that offered better-trained associates.

Source: pressconnects.com

January 16, 2009

Circuit City to axe 34,000 more jobs, close 567 remaining US stores

According to AP: “Circuit City became the largest retailer to fall victim to the expanding financial crisis Friday, announcing it will shut down its remaining 567 U.S. stores at the cost of 34,000 more jobs after failing to sell the business.”

“Unfortunately, there won’t be a Circuit City after today,” Circuit City lawyer Gregg Galardi said Friday, January 16, 2009.

“Wall Street analysts said in November that the prospects of long-term survival for the Circuit City were bleak. Months of declining sales during the recession sent the company over the edge, although its problems go back a decade, from buying cheap real estate leases in inferior locations to laying off its most experienced sales staff. The latter saved money but cost the company employee morale and countless customers.”

Update (1-16-2009): Circuit City estimated the value of its inventory at $1.2 billion to $1.3 billion, and creditors are guaranteed 70.5 percent. Stockholders will probably get nothing, Circuit City said in a statement, according to Bloomberg

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