Battered by a weak economy and tightening credit, Circuit City today said it would close 155 US stores and will reduce future openings.
The closures will result in the loss of about 17% of its workforce. According to its Web site, the company had 42,974 employees as of February, so the cuts could mean up to about 7,300 jobs. However, that number may be lower because employees in some markets may become employed at other stores, the company told the Associated Press.
The Richmond, VA-based electronics retailer also announced that it will begin to renegotiate leases to reduce rents or terminate agreements, and dropped plans to open at least 10 stores that were previously expected to open. The chain said it is considering “all available options and alternatives to restructure its business.”
The stores targeted for closing, which generated a total of about $1.4 billion in net sales in 2008, are underperforming or no longer a strategic fit, according to the company. Those stores are expected to be closed Tuesday, and will reopen Wednesday with store closing sales, which are expected to be completed by year’s end.
“The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors,” said James Marcum, vice chairman, acting president and CEO of Circuit City Stores Inc. “The combination of these trends has strained severely our working capital and liquidity, and so we are making a number of difficult, but necessary, decisions to address the company’s financial situation as quickly as possible.”
Prior to today’s announcement, the chain operated 712 Superstores and nine outlet stores in the U.S., and 770 retail and dealer outlets in Canada. The closures will not affect its international operations.