Time is running out for Circuit City. The nation's second-largest electronics retailer has until next Friday to find a buyer or go out of business.
A bankruptcy court judge in Richmond, Va., where the chain is based, approved the company's plan yesterday. Circuit City says it is negotiating with two possible buyers and hopes to sell to someone who would keep the brand intact. If that fails, the company's assets will likely be sold off piece by piece.
Circuit City has been ailing for years and looks likely to become the first casualty of the holiday shopping season, the worst on record. The company closed 155 stores after it filed for bankruptcy in 2008 and recently has been said to have fallen behind on payment to vendors, making it hard to keep the shelves stocked.
Analysts say that 75 percent of the company's sales are made on credit cards. As credit card issuers clamped down hard on consumer credit late last year, customers scaled back on their purchases, hitting Circuit City hard and flattening the usual bump in holiday sales.
Circuit City was the No. 1 electronics retailer in the 1990s and is credited with inventing the electronics box store model. It sought to branch out into other businesses, including home security, DVD rentals and CarMax. None of those businesses took off and critics say they drained Circuit City's cash and expertise, allowing Best Buy to take the top spot in electronics sales.
