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Circuit City, winner of the dumbest retail business move of 2007, is poorly managed underperformer. Its closest competitor, Best Buy (BBY), has been dominating the electronics retail segment. In a continuing sad saga, Circuit City handed out sizable bonuses for executives while cutting top-performing employees at stores because they were “over-paid”. In response both the sales and stock price tanked. The ills of Circuit City can only be resolved by the replacement of the current management team, and a complete re-focus on the consumer.
The company [Sharper Image] also made a bunch of strategic missteps. It relied too heavily on blockbuster products, like the Razor scooter. It sold a ton of Ionic Breeze air purifiers, which Consumer Reports panned so viciously in 2002 that a class action lawsuit was filed against Sharper Image for refunds. (A judge's rejection of a settlement to that lawsuit—she didn't like the $19 store coupon proposed for each Ionic owner—seemed to precipitate the Chapter 11 filing.)
According to The Wall Street Journal, "The Dothan, Ala., company will file for bankruptcy this month and hopes to emerge from Chapter 11 in early 2008, according to people with direct knowledge of Movie Gallery's plans. They spoke on condition that they not be identified."
The company is burdened with a massive debt load, much of it the result of its ill-conceived $1 billion acquisition of Hollywood Video in 2005. Interestingly, Movie Gallery outbid Blockbuster Inc. (NYSE: BBI) for that prize: File that one under Pyrrhic victory.
Brick-and-mortar movie rental outlets have struggled with competition from services like Netflix Inc. (NASDAQ: NFLX) and Blockbuster's Total Access program.
The company[Linen n Things], based in Clifton, N.J., said the bankruptcy filing would allow it to continue paying employee salaries and benefits as well as honor gift cards and store credits. The chain's parent firm, Linens Holding Co., said the bankruptcy was related to the current economic downturn.
”The significant deterioration in the mortgage, housing and credit markets and the resulting impact on the retail marketplace, particularly the home sector, has overwhelmed the operating and merchandising improvements that we have made over the past two year,” said Robert J. DiNicola, executive chairman, in a statement.
The company reported a $242 million loss last year, competing head to head in many locations with Bed, Bath and Beyond, which has a store at Crystal Mall in Waterford. Bed, Bath and Beyond reported gross profits of nearly $3 billion last year.
“We are hopeful this filing will enable the business to emerge stronger and better positioned for long-term success,” said Larry Zigerelli, Chairman and CEO of Levitz Furniture. “We have an exceptional group of people at Levitz who have made great strides to improve our business during a challenging period for our entire industry.”
Levitz said the filing became necessary because it had insufficient liquidity to support its operations. The 76-store company said it will evaluate options including a sale or identifying new financial investment, and has the consent of its lenders to use funds to continue to operate its business.
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