Electronics retailer Circuit City has announced plans to close 155 store locations and lay off approximately 17 percent of its workforce, in what might be a last-ditch effort to restructure its business. The official list of store closures (PDF) is available now; the company plans to conduct the shutdowns before the holiday buying season begins in earnest so it can transfer inventory and personnel to better-performing locations and make the best of its efforts.
“Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply,” said Circuit City vice chairman (and acting president and CEO) James A. Marcum, n a statement. “The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors. 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.”
Circuit City expects to close the doors on the 155 locations Tuesday, November 4, and launch closing sales on Wednesday, November 5, with the stores’ final shutdowns coming by the end of 2008. The 155 locations generate about $1.4 billion in sales, but even that number made them unprofitable when Circuit City tallied up their costs, including marketing expenses.
Circuit City will maintain a strong retail presence—some 566 locations will remain open—but the company says it is “evaluating all options” for restructuring its business, including additional “near-term” cost reduction methods and working with lenders and investors on financing alternatives…although the costs of these shutdowns will carry over into the company’s fiscal 2009 finances.
