Today, The Washington Post reported, via the Associated Press, that Circuit City filed for bankruptcy protection today in New York. It filed under Chapter 11 of the bankruptcy code, which will allow it to hold off creditors and continue operations while it develops a reorganization plan.
According to JPMorgan analyst Christopher Horvers, “this isn’t a surprise.” Horvers goes on to say, “At the end of the day I think it’s really about an inventory position … If they can get inventory into the stores, I can think they’ll remain competitive.”
Obviously, Horvers has not recently gone into a Circuit City store. Circuit City’s failure has nothing to do with their inventory position. It’s their horrible customer service and dysfunctional store layout that is crippling their ability to compete. On top of that, it’s the recession and credit strapped consumers’ inability to buy anything on their maxed out credit cards that will prevent any plan of reorganization from succeeding.
It doesn’t take a rocket scientist or a Wall Street financial analyst to figure this one out. All you have to do is visit a local Circuit City store and try to find and buy something. During times of recession, retailers need to bend over backwards and go out of their way to improve, faciliate, and expedite the shopping experience. This is where Circuit City has failed miserably. It for this primary reason that Circuit City will close its doors and re-emerge from bankruptcy under another name, likely Target, Walmart, or Best Buy.