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Business Makeover: Circuit City


If it's broke, fix it.


Last week, in an effort to keep the proverbial lights on, Circuit City (CC) announced it would shutter 155 stores by the end of the calendar year and lay off 7,300 of its 43,000 workers. Yesterday, the big-box consumer electronics dealer filed for Chapter 11 bankruptcy protection.

With the company's stock now delisted by the New York Stock Exchange (after trading under $1 for a month) and fearful vendors threatening to withhold product for the holiday season, the measure is a last-ditch attempt at restructuring.

But, unlikely as it may seem, there's still hope for Circuit City. Minyanville explains.

Customers are wary of making purchases from a retailer that might not be around to honor returns and exchanges. Stress that, whether in or out of business, Circuit City's nonexistent customer service will remain the same.

Shoppers balked at dealing with less knowledgeable staff after more experienced (and higher-paid) employees were laid off in March 2007. Replace clueless workers with computer kiosks set to

People often misinterpret "Chapter 11" to mean "going out of business." Remind consumers that many companies bounce back after filing Chapter 11 - like WorldCom, Linens 'n Things and Enron.

Layoffs are unfortunate, albeit necessary, during restructuring. Reward the hard work of ex-employees with the gift that keeps on giving: Stock options.

"Circuit City," with its implied promise of a metropolis full of consumer electronics, may have been overly ambitious. Consider "Circuit Shanty Town."

No positions in stocks mentioned.
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