Circuit City ain't sitting pretty these days. The electronics retailer is bleeding cash, shrinking rather than growing, and several turnaround efforts have failed badly. A $5 billion market cap has dwindled to just $68 million in less than three years. Can this troubled retailer survive?
Pros and cons
To Circuit City's credit, the company carries very little debt on its balance sheet. That's reassuring in these times of harsher corporate lending practices, brought on by a worldwide banking brouhaha. And... um, that's really about it. It's very hard to find anything else on which to pin your hopes of City's survival today.
But when it rains, or pours, and there's plenty of bad news here. While archrival Best Buy grew its sales nearly 11 percent in the past 12 months, Circuit City's shrunk by 7 percent. For every dollar of sales, the company pays out $0.79 to cover the cost of the wares sold, leaving very little wiggle room for salaries, decent marketing, or store maintenance. It's all gone before reaching the bottom line.