Circuit City Sales Plummet: Attorney
By Alan Wolf -- TWICE, 12/23/2008
Richmond, Va. — Sales at Circuit City have fallen between 43 percent and 50 percent since the chain filed for Chapter 11 protection on Nov. 10, an attorney for the company told a federal bankruptcy court here yesterday.
According to a report in the Richmond Times-Dispatch, the downturn was almost double the retailer’s projected sales decline of 28 percent. Circuit City built the forecast into its budget, the attorney said during a hearing, which is based on a $1.1 billion revolving credit line that the court approved yesterday.
In a written statement, Circuit City spokesman Bill Cimino told the newspaper that the weaker-than-expected results “should not be considered a negative,” given a deteriorating economic environment in which all retailers are struggling. He added that the company is improving its gross margin rate, which is helping it manage its budget and offset the sales decline.
But retail consultant and investment banker Howard Davidowitz told the newspaper that the terms of the loan and the “collapsing” of Circuit City’s customer base will make it nearly impossible for the company to survive.
Circuit City’s attorney said the chain is "building a bridge to somewhere" and remains focused on working its way out of bankruptcy, which could include a sale, the newspaper reported.
