Sunday February 01, 2009

Circuit City to liquidate, affecting 30000 employees

channelnewsasia.com :

Electronics retailer Circuit City said Friday [16 Jan 2009] it would liquidate all its 567 US stores after failing to restructure the company, throwing the future of its 30,000 workforce into uncertainty. The action came after the company filed for bankruptcy protection in Nov 2008, the first major retailer to file for Chapter 11 amid a prolonged recession. Latest data show retail sales fell for the 6th straight month in Dec 2008 in a sharp consumer pullback. Retailers had hoped of some recovery during the recent holiday season but to no avail as consumer spending continued to shrink.

"We had hoped to be able to emerge from Chapter 11 bankruptcy protection as a stronger, more competitive company and we made significant progress during the reorganization to improve our business," Circuit City said. "Unfortunately, the economic climate is so poor that we have no choice other than liquidation."

- Electronics seems to be the leading indicator for the rest of the economy, whether on the upside or the downside. It is also apparent that the electronics sector leads everything else, both from a manufacturing and retail point of view. Early warning signs for Circuit City were noted back in Mar 2007 when in an earlier mass layoff, they announced 3500 job cuts. Now they are looking at not just bankruptcy but liquidation. This liquidation theme is something that contrarian writer Jim Willie had talked about and which I had also touched on as well. The contrarian community is talking about collapse nowadays, and it should be apparent by now that this is not some ordinary run-of-the-mill business-cycle recession.

See also :

1. Circuit City to cut more than 3500 jobs
2. Wave of job cuts across corporate America, mass layoffs well beyond Wall Street
3. Citigroup to cut another 53000 jobs in huge mass layoff
4. Baltic Dry Index falls 93% as shipping rates plunge, signalling global economic collapse
5. Happy New Year 2009 : The Year of Collapse

(2009-02-01 11:27:25 SGT) [Biz] Permalink

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