Barrie, Ont.-based InterTAN Canada Ltd. was quick to issue a statement saying all 765 stores will remain open in Canada, while its U.S.-based Circuit City Stores are about to sell off its merchandise of 567 outlets after an agreement with its liquidators Great American Group, Hudson Capital Partners, SB Capital Group and Tiger Capital Group.
Circuit City CEO James Marcum failed to find a buyer or renegotiate a better financing deal to keep America’s second largest IT/CE retailer afloat.
In Canada, The Source by Circuit City can still operate because they are not part of the liquidation process and was granted last November creditor protection by the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (CCAA).
Since that time, InterTAN has been working with NM Rothschild & Sons Canada Ltd. trying to find a buyer.
According to the statement by InterTAN, there have been active discussions with a number of interested bidders and expects to receive formal proposals on or before January 23.
The Source by Circuit City was once Radio Shack, a retailer with many decades of success. InterTAN no longer owns the brand name Radio Shack and the chances of return to the Radio Shack brand is up the air and will depend on the new buyers’ plans; if a buyer materializes. The company operated under Radio Shack for 35 years in Canada, but in early 2007 was forced to close 62 stores when its parent company Circuit City declared them to be under performing.
InterTan is a wholly-owned subsidiary of the Richmond, Va.-based Circuit City Stores Inc. Its U.S. parent filed for Chapter 11 bankruptcy protection also in November of 2008. Circuit City’s Chapter 11 filing caused a termination of InterTAN’s credit facilities, which forced the company in CCAA.
Ron Cuthbertson, the president of InterTAN, said in a previous interview that the company regrets the necessity of the CCAA action and will be working with suppliers, employees and creditors to produce a successful holiday selling season.
“The Source is a small-format specialty retailer with 765 stores across Canada, significant future growth potential and approximately $650 million of annual revenues. Our management is committed to working with our employees, dealers, joint-venture partners, vendors, landlords and other stakeholders to emerge from CCAA,” he said.
While the 765 stores will remain open, the company did not reveal the status of InterTan’s five technical service centres or its 350,000 square foot distribution centre.
Circuit City’s U.S. quarterly disclosure reported that Canadian operations recently delivered stable or improving performance. For the second quarter ended August 31, 2008, the Source in Canada had a profit of US$4.9 million, up 133 per cent from US$2.1 million a year earlier. Net sales were US$147.3 million, up 11.2 per cent from US$132.5 million business.
The Source by Circuit City operates differently in Canada than the big box Circuit City stores in the U.S. The Source stores are significantly smaller on average in terms of floor space, employ fewer staff and carry less inventory. They are also predominantly located in shopping malls.