Circuit City liquidation:US Stores closing

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.

The closure of the nation's second-biggest consumer electronics retailer spells more trouble for the nations malls, and is the latest casualty of an unprecedented pullback in consumer spending that has claimed KB Toys, Mervyns LLC and Linens 'N Things.

"Very, very sad,I feel particularly badly for the people who are employed or until recently were employed." said Alan L. Wurtzel, son of company founder Samuel S. Wurtzel and himself a former chief executive of Circuit City.

Richmond, Va.-based Circuit City had been seeking a buyer or a deal to refinance its debt, but the hobbled credit market and consumer worries proved insurmountable. Negotiations for an acquisition extended past midnight Thursday before finally falling through, Circuit City lawyer Gregg Galardi said.

Two potential buyers,Mexican billionaire Ricardo Salinas Pliego, who controls a chain of electronics stores in Latin America, and the Golden Gate Capital private equity firm considered a shrunken form of the business, retaining as many 350 stores or as few as 180. But Circuit City couldn't secure the necessary financing or support from vendors.

U.S. Bankruptcy Judge Kevin Huennekens gave final approval to the liquidation plan Friday afternoon. Some employees were notified that they would lose their jobs and certain stores would begin close-out sales as early as Saturday.

"Since my childhood, that's been where you go to buy electronics Circuit City," said 37-year-old Sonya Webb

Webb, an administrative assistant at a dialysis clinic, said she usually compared Circuit City, Best Buy and Sears when making purchases, but that Circuit City was always her preferred choice. She said she came to buy the TV after she heard that the stores were closing.

Circuit City said liquidating the stores should last through March, after which they will be closed. A small staff will keep working at the corporate office through that process.

The company's inventory has a retail value of about $1.8 billion, said James Schaye, president and CEO of Hudson Capital Partners, the liquidator. He said sales will begin with up to 30 percent discounts and will be adjusted as the liquidation continues.

It was unclear what would happen to the company's 765 retail stores and dealer outlets in Canada. Galardi told a judge there are still bids for the Canadian business.

Circuit City's brand value was diminished in the 1990s as it faced tougher competition from Best Buy Co., which built bigger stores in better locations.

Circuit City's failed turnaround efforts included laying off higher-paid employees, opening smaller concept stores, seeking potential buyers, changing management and closing stores. In 2007, it laid off about 3,400 store workers and replaced them with lower-paid employees. Analysts had warned the move could hurt morale and drive away customers.

Circuit City said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31. Under court protection, it broke 150 leases at locations where it no longer operated stores and closed 155 stores in the U.S. in November and December.

The company filed for Chapter 11 bankruptcy protection in November.