"Very, very sad," said Alan L. Wurtzel, son of company founder Samuel S. Wurtzel and himself a former chief executive of Circuit City. "I feel particularly badly for the people who are employed or until recently were employed."
Richmond, Va.-based Circuit City had been seeking a buyer or a deal to refinance its debt, but the hobbled credit market and consumer worries proved insurmountable. Negotiations for an acquisition extended past midnight Thursday before finally falling through, Circuit City lawyer Gregg Galardi said.
Two potential buyers - Mexican billionaire Ricardo Salinas Pliego, who controls a chain of electronics stores in Latin America, and the Golden Gate Capital private equity firm
- considered a shrunken form of the business, retaining as many 350 stores or as few as 180. But Circuit City couldn't secure the necessary financing or support from vendors.
"This is the only possible path for our company," acting Chief Executive James A. Marcum said in a statement. "We are extremely disappointed by this outcome."
U.S. Bankruptcy Judge Kevin Huennekens gave final approval to the liquidation plan Friday afternoon. Some employees were notified that they would lose their jobs and certain stores would begin close-out sales as early as Saturday.
"Since my childhood, that's been where you go to buy electronics - Circuit City," said 37-year-old Sonya Webb, who was standing outside a store in Chattanooga, Tenn., watching as an employee set a 46-inch Sony television in her car.
Webb, an administrative assistant at a dialysis clinic, said she usually compared Circuit City, Best Buy and Sears when making purchases, but that Circuit City was always her preferred choice. She said she came to buy the TV after she heard that the stores were closing.
Circuit City said liquidating the stores should last through March, after which they will be closed. A small staff will keep working at the corporate office through that process.
The company's inventory has a retail value of about $1.8 billion, said James Schaye, president and CEO of Hudson Capital Partners, the liquidator. He said sales will begin with up to 30 percent discounts and will be adjusted as the liquidation continues.
"There's a lot of great deals," Schaye said. "If you're competing against someone like Best Buy, we're going to be at a much better discount than they're going to be."
It was unclear what would happen to the company's 765 retail stores and dealer outlets in Canada. Galardi told a judge there are still bids for the Canadian business.
Circuit City's brand value was diminished in the 1990s as it faced tougher competition from Best Buy Co., which built bigger stores in better locations.
Wurtzel has previously said Circuit City didn't take the threat from Best Buy seriously enough and at some points was too focused on short-term profit rather than long-term value.
Circuit City's failed turnaround efforts included laying off higher-paid employees, opening smaller concept stores, seeking potential buyers, changing management and closing stores. In 2007, it laid off about 3,400 store workers and replaced them with lower-paid employees. Analysts had warned the move could hurt morale and drive away customers.