fall of circuit city by manpreet singh digital

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Infographic fall of circuitcity Case study solution by Manpreet Singh digital

Infographic fall of circuitcity Case study solution by Manpreet Singh digital

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  • 1. TEAM No 4 Sarang Banubakde Manpreet Singh Chabbra Richard Sharp Era Marcum Era Schoonover Era McCollough Era In 2008 liquidated 155 US stores and lay off 8000 employees. On November 2008 filed for chapter 11 bank- ruptcy protection. On Jan 16,2009 circuit city forced to Liquidation and accepted bids from 4 liquidator Great Amer- ican group WF LLC,Hudson Capital Partners LLC, SB Capital group LLC, Tiger Capital Group LLC. Largest Retailer to fall in 2008 financial crises 1980 sales reached $120 billion and operating profit of $4.9 billion Listed on New York stock exchange . Circuit City grew rapidly with 96 superstores and 23 regular stores by 1989, with sales of $1.7 billion and operating profit of $123 mil- lion. Introduced firedog(SM) internal technical help staff, to enhance customer experience. 5% sales increased in same store sales,but suffered loss of $116 million Shut 64 Canadian Store & operating income felt by 51%.. Net loss of $320 million and share sunk to $4.2 per share 3400 employees replaced with low apid workers Faced aging and fading brand image Aggressive pricing by competitors and failed to com- ply on that. Closed 6 distribution centers and laid off 1000 em- ployees. Hired FCB for rebranding and in 2006 after huge turbulence sales rose to $11.6 bn & OP $211 million Pioneered the electronics superstore format in the 1970s At the time of liquidation, Circuit City was the second largest U.S. electronics retailer, after Best Buy. Large stores about 30,000 to 40,000 square feet in size. Everything offered was on 30 days money back guaran- tee. If the customer could find the cheaper deal they would get 110% of the price back. Commissioned sales counselors were trained to provide expert advice. Service and repair departments were available in store. Fast access to credit was part of the offering. Customer Satisfaction surveys would keep everything on track Reve- nue Profit Year Reve- nue Profit $12.6b n $541 mn 2000 $12.5 bn $ 539 mn $ 10.5 bn $ 323 mn 2001 $15 bn $ 548 mn $9.6 bn $ 237 mn 2002 $19 bn $946 mn $9.8 bn -$89 mn 2004 $24 bn $ 1.2bn $ 11.7 bn -$320 mn 2008 $40 Bn $ 2.2 bn Then Circuit City stopped selling appliances. It didn't move as aggressively into gaming as it should have It missed out on big in-store promotions with thriving companies like Apple Computer. Circuit City neglected to improve its Web presence, just as online retailers like were hitting their stride. They had been unable to move their inventory . Circuit City became complacent — a fatal mistake in the fiercely competitive and fast-evolving retail- electronics industry . Shutdown cost and employee layoff and addition of new employees (required traning) added to negative profits. Exhibit 2-d inferred that debt capital ratio was conti- nuslouy snoring , led to WC shortfall. Aggressive discounting made it more vulnerable to- wards bankruptcy . Huge turbulence in management.