Circuit City on the verge of drastic cuts

October 20, 2008 7:14:16 PM PDT
Circuit City may be on the verge of closing as many as 150 stores and cutting thousands of jobs. The Wall Street Journal reports it is part the company's plan to avoid filing for bankruptcy.

This is latest big retailer struggling to stay solvent at a time of dwindling consumer confidence.

While customers are still going in to circuit city stores in San Jose, the Wall Street Journal is saying Circuit City is on the way out.

The Journal reports Circuit City is trying to stave off bankruptcy at a time when its stock is down to less than 40 cents a share.

On Monday, the company called the bankruptcy talk rumors and stated that they are: "Conducting a comprehensive review of all aspects of our business to determine the best methods of accelerating our turnaround."

The message went on to say the long-term interest of circuit city and its stockholders were paramount, but said nothing about its employees and customers.

If circuit city were to declare bankruptcy, it would be the largest retailer to do so in years. The company employs more than 45,000 people throughout the U.S. and Canada.

Last week, large retailers like Bay Area-based Mervyns and Linen N' Things decided to close their doors after the holidays.

Donald Havens is a retail and marketing lecturer at San Jose State University. He thinks other retailers that sell expensive items which depend on disposable income, might also suffer in these uncertain economic times.

"I think there is a certain amount of apprehension on where to spend money. People feel uncomfortable at this point in the economy," said Havens.

Jack Dougherty is with Best Buy at Santana Row in San Jose. He says sales have dropped on big ticket items like flat screen TV's but other items are still moving.

He thinks Circuit City just couldn't compete.

"Competition is great. It helps the consumer and keeps us on our toes. Competition is great, we're going to be here," said Dougherty.

Dougherty believes that holiday sales will be fruitful but customers are not so optimistic.

"Try to set a budget and stick to it more than we usually do. Try and focus on what we need as opposed to what we want," said consumer Jennifer Kard.


Load Comments