CIRCUIT CITY ON THE WAY OUT

Circuit City Inspired Christmas Shopping Tips

Christmas shopping tips are coming up shortly. First let's ponder the plight of Circuit City. The Register is reporting Circuit City mulls mass layoffs, store closures.

Circuit City may lay off thousands of workers and shut down at least 150 stores to avoid filing for bankruptcy protection, according to reports.The Wall Street Journal quoted unnamed sources as saying the second-largest US consumer electronics retailer is considering the culling as a way to get through the holiday season.The company is also in talks with investment bank Rothschild to guide talks for emergency funding. Lenders have shown little interest in financing the company.

The paper reports Circuit City investors want to avoid filing for bankruptcy before the holiday shopping season, fearing customers won't trust its ability to honor extended warranties on products like laptops and TVs. Extended warranty sales make up a healthy percentage of Circuit City's profits.

"The management team, board of directors, and its strategic financial advisers are conducting a comprehensive review of all aspects of our business to determine the best method of accelerating our turnaround," Circuit City spokesman Bill Cimino told the WSJ.Shopping Tips.

If you are thinking about buying someone a Circuit City gift card, think again about what you are doing. There is no reason to expect Circuit City to survive. Its stock is trading at $0.35.If you already have a Circuit City gift card, please go use it. If you hold that card after it files bankruptcy, the card will likely be worthless.

Maintenance contracts are normally a waste of money in any circumstances. In the case of Circuit City it is extremely ill-advised to buy them.

Bear in mind that all Circuit City purchases are likely to be final. Unless they have a very compelling offer on something you want, at a lower price than elsewhere, I would stay away altogether.

The above advice pertains to any struggling retail merchandiser, not just Circuit City.

If you are exchanging gifts, especially with someone who is struggling, try and make those gifts as practical as you can.

A big fancy fruit basket and items from food specialty stores may look practical but they are not. The markup on those things is astronomical. If you want to give someone a fruit basket, make it yourself. You can usually find an inexpensive basket to start from at a place like Hobby Lobby.

Many people are going to lose their jobs in 2009. I suspect those who are about to lose their job as well as those already out of a job will appreciate a gift card at a grocery store far more than a gift card at a knickknack store. Actually I do not like gift cards at all but most do. One advantage of a gift card is ability to take advantage of after Christmas sales.

Regardless of where you shop, my advice is to shop less and save more. Your job may be in jeopardy and you might not even know it. Frugality is the new reality for consumers and businesses alike.

A penny saved is a penny got. That penny is likely to be worth more tomorrow than it is today. It is one of the consequences of the deflationary times we are in.

Mike "Mish" Shedlockhttp://globaleconomicanalysis.blogspot.com