The company, which filed for bankruptcy court protection in November, said it was unable to reach an agreement with creditors and lenders to save the company, which has suffered from missteps and falling sales in the economic downturn. Without a deal, "this is the only possible path for our company," James A. Marcum, vice chairman and acting president and chief executive of Circuit City, said in a statement.
The company expected to release details soon about its plans for liquidation of stores and other assets. Before filing for bankruptcy protection, Circuit City said it would close 155 stores. The company has slightly more than 550 stores remaining.
While the poor economy has taken its toll on the company, the retailer never recovered from a management decision to replace experienced sales staff with lower-paid, less-experienced workers. The move hurt revenue and damaged the company's reputation.
Circuit City's chief rival was Best Buy, which, despite running a better business, hasn't been immune from the economic turmoil. The company in November lowered its earnings outlook for the fiscal year ending Feb. 28, saying sales at stores open at least a year would fall between 1% and 8% from the previous year. The company had expected sales to grow by 2% to 3%.
Retailers in general have been hit hard in the current recession, which brought dismal sales during the all-important holiday shopping season as consumers held a tight grip on their wallets. Other companies that have announced liquidation include Bombay Co., Linens 'n Things, Mervyn's, and Sharper Image.