Retail Roundup: Circuit City Files for Bankruptcy Protection, Gifts Cards Fly Off Shelves, and More

Circuit City files for bankruptcy protection — After 59 years in business, retail giant Circuit City filed for Chapter 11 bankruptcy protection when the chain’s suppliers cut off credit and demanded up-front cash for shipments. Sales at the chain’s 1,500 locations have been declining for months, and the company owes $119 million to Hewlett Packard Co. “It’s very incongruent for retailers to file bankruptcy before Christmas,” said Burt Flickinger of the Strategic Resource Group in a television interview. Yet, the retailer was apparently left with little choice: The company said in its filing that vendor concern that Circuit City wouldn’t be able to pay its bills “escalated considerably” in the past few days. [Source: Bloomberg]

Gift cards top present pick for season — Holiday shoppers are leaning toward quick and easy presents that offer the gift recipient flexibility in the economic downturn, according to analysts who predict gift cards will be especially popular this year. “We see gift cards bumping out apparel this year” as the top holiday present, said Diane Crispell of GfK Roper Consulting. Gift cards are predicted to rise from the third most popular gift item of 2007 to No. 1 this year, according to survey by a New York-based marketing firm. [Source: Pittsburgh Tribune-Review]

Hosiery could be new indicator of struggling economy — The term “lipstick index” was coined in previous downturns as a supposed indicator of a dire economy; in the past, women bought lipstick during tough times as a quick pick-me-up. Yet, this recession, it’s not lipstick that’s flying off the shelves: it’s hosiery. U.S. sales of women’s hosiery rose 2.3 percent to reach $3.28 billion in the 12 months through Sept. 30. Women have been treating themselves to opaque or patterned tights as an inexpensive way to update their look, says Dan Sackrowitz of Barenecessities.com. “You don’t have to invest in a whole new fall wardrobe,” he says, adding that his site saw hosiery sales increase by 60 percent in September and 70 percent in October. [Source: Heard on the Runway]

Claiborne may regret parting ways with Rodriguez — Liz Claiborne may be feeling a pang of regret for selling off its stock in the Narciso Rodriguez label following election night, the opportunity Michelle Obama took to wear a now-famous red and black Rodriguez wrap gown. The new First Lady’s looks have already influenced retail sales; Obama’s favorite Chicago-based designer, Maria Pinto, says sales soared 45 percent after Obama started wearing her looks on the campaign trail. That’s exactly the kind of boost Claiborne needs: Shares of the company are down almost 50 percent in the last month. [Source: ClusterStock]