Circuit City Files Bankruptcy

The latest victim of Bush economics filed for Bankruptcy today.

Circuit City, the second largest electronics retailer in America, filed Chapter 11, along with a similar filing in Canada.

But I have to say, I saw it coming. Walk into a Best Buy, and then back into a Circuit City. Look at the difference. It's like Walgreens vs. CVS. Wal-Mart vs. K-Mart.

Circuit City, at least the ones I've seen, are dreary ugly stores. The layout and look of the stores are stuck in some 1980s time warp. Best Buy evolved, Circuit City did not, and now they must pay the price.

During the last day of trading, shares in the company plunged to 11c before trading was halted. The recent round of store closings announced last week, together with what happened today will cost around 7,300 people their jobs. Although they will be allowed to keep their doors open through Christmas.

When it comes down to it, though, there is clearly some blame to go around. A few years ago this is the company that fired all (or most) of its middle management, and rehired them on lower pay. A real asshole move from the board (whom I'm guessing didn't take much of a pay cut).

So when you combine second rate stores, with crappy direction from the board, you end up with a shit storm like this.

In 2004 they hired a CEO called Philip J. Schoonover, who was also Chairman and President of the company. He quit about three weeks ago, having failed to achieve anything useful during his four year stint. Despite what can only be described as a cluster fuck in business management, this man was earning around $900,000 a year. And his contract provided a $1.8m golden handshake upon his departure.

I seriously would like to know how you can get appointed CEO of a company, get paid nearly a million dollars a year, do such a shitty job that the company stock ends up worth 11c a share, and then jump ship a few weeks before the company goes bankrupt and walk away with $1.8m! How the hell to these guys get these jobs?!?

Time will tell what will happen to this company. It would be yet more devistating economic news if they close their doors forever. But that said, I certainly wouldn't want to buy from them now, unless it's some blow out going out of business bargain. I can't trust that they will be there for me if I need to take something back. So this fear from consumers is likely to bang a few more nails into the coffin for this company.