Bankrupt Circuit City Stores Inc. said Friday it was closing its 567 U.S. electronics stores and leaving its 34,000 employees jobless as the nation's employment picture grew bleaker.
It was the worst day this year for news of layoffs, bank losses and store closings, and employers signaled more bad news ahead.
Car rental firm Hertz Global Holdings Inc., oil producer ConocoPhillips, chip maker Advanced Micro Devices Inc. and health insurer WellPoint Inc. all announced workforce reductions of 1,000 positions or more. And big cutbacks are expected soon at GE Capital Corp., drug maker Pfizer Inc. and media company Clear Channel Communications Inc.
Also Friday, two of the nation's biggest banks said they lost money in the last three months of 2008. Bank of America Corp. said it lost $2.6 billion; Citigroup Inc. reported an $8.3-billion loss.
The litany of bad news came just days before President-elect Barack Obama's inauguration and underlined the challenges he faces. The U.S. economy is reeling from collapsing home prices, a stubborn credit crunch and a sharp downturn in the stock market.
And as more companies pare their payrolls, experts said the recession that began officially in December 2007 would drag on for months. Circuit City's announcement that it was pulling the plug for good also paved the way for more dead space in the nation's shopping malls -- an everyday reminder of the troubles at hand.
"You have more and more companies either going out of business, as in the case of Circuit City, or concluding that there's no sign of an upturn any time soon, and they have to take actions to protect themselves," said Nigel Gault, chief U.S. economist at IHS Global Insight.
Circuit City, the nation's second-largest consumer electronics chain, represents the first major retail collapse since the dismal holiday season ended and one of the biggest industry liquidations ever to take place in the U.S., experts said.
Going-out-of-business sales begin today, with merchandise discounted by 10% to 30%. All Circuit City stores in the U.S. -- including about 75 in California -- will close by the end of March, and markdowns could become as steep as 90% in the final days, said Andy Gumaer, chief executive of Great American Group of Woodland Hills, one of four companies appointed to liquidate the chain.
"Everything will be liquidated to the bare walls," he said.
The 60-year-old chain had struggled to find a buyer after filing for Chapter 11 protection in November.
"We are extremely disappointed by this outcome," James Marcum, acting chief executive of Circuit City, said in a statement. "This is the only possible path for our company."
The company said its Canadian operations would continue.
At a Circuit City store in Hollywood on Friday, Geraud Brisson said he was stunned by how many employees would lose their jobs.
"It's awful," said Brisson, 38, who was shopping for a stereo system. Circuit City "always presented themselves as being so sturdy and institutional."
Brisson, a film editor from Silver Lake, said the existence of fewer bricks-and-mortar electronics stores might drive him to shop for electronics online. "I think it might be the only place to compare products and have competition," he said.
Eric Honanie, a safety compliance coordinator from Los Angeles, said he worried that prices would increase at some of Circuit City's competitors. Shopping online wasn't a viable option, he said, because it took away the experience of shopping for electronics in a store.
"I like to go out and look at things. You're limited with your shopping online," Honanie, 41, said. With electronics, "it's a lot of touching and feeling."
Circuit City, based in Richmond, Va., faced stiff competition in recent years from Best Buy Co., Wal-Mart Stores Inc. and online electronics sellers such as Amazon.com Inc.
After filing for bankruptcy protection two months ago, the company said it was confident that it would emerge intact and assured customers that the filing "does not mean that Circuit City is going out of business."
But there were many skeptics from the beginning, said Marc Winthrop, a bankruptcy attorney at Winthrop Couchot Professional Corp. in Newport Beach.
"There was a lot of talk when they first went in that they weren't coming out. They were gone," Winthrop said. "In today's environment, where sales are declining at the same time that capital is generally unavailable, they just couldn't survive."
The chain's failure will bring "a lot of additional pain" for landlords who own Circuit City's buildings and must find replacement tenants, said Steve Plenge of Pacific Retail Capital Partners, an El Segundo real estate investment firm.
"Backfilling more than 500 stores will be tough," Plenge said. "There used to be three or four retailers in each big-box category such as electronics, and now it's only one or maybe two."