Monday, November 10, 2008

Circuit City files for bankruptcy

Stores may close at least 150 stores in a maneuver to avoid sliding into bankruptcy, according to reports.

Circuit City hired outside help to develop a turnaround plan and is talking with investment bank Rothschild to help secure emergency funding, according to The Wall Street Journal.

Earlier this month, Circuit City, Richmond, Va., was downgraded by retail credit-rating service Bernard Sands after the retailer reported a $239 million loss in its second fiscal quarter.

The report of closing stores comes just a couple of weeks after Circuit City told the Richmond Times-Dispatch that it planned to cut back on the number of stores it planned to open by the end of its fiscal year in February 2009. Through Aug. 31, Circuit City had opened 29 stores this fiscal year and had planned to open as many as 26 more, according to the newspaper.

Last week, Circuit City launched a campaign promising the same price for in-store purchases as for products bought online. The company said a study found that consumers would place more trust in a retailer that offered the same price through different channels.

Shares of Circuit City closed at 39 cents on Oct. 17. The stock was trading as high as $5.75 per share in April.

In September, Philip Schoonover stepped down from the company as chairman, CEO and president and was replaced on an interim basis by James Marcum as president and CEO.

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