Circuit City To Close 155 Stores, Cut Jobs

As Many As 7,300 Workers To Be Laid Off As Electronics Chain Pulls Out Of Dozen Markets

(AP)  Circuit City Stores Inc. said Monday it is closing about 20 percent of its U.S. stores and cutting thousands of jobs in an effort to return to profitability as it finds consumers reluctant to spend and its vendors less eager to give it credit.

The nation's No. 2 consumer electronics retailer said it will shut 155 of its more than 700 stores and leave at least a dozen markets entirely, including Phoenix and Atlanta, by Dec. 31. It will lay off about 17 percent of its domestic work force, which could affect up to 7,300 people.

Circuit City also said it will further cut back on new store openings and plans to work with landlords to renegotiate leases, lower rent or terminate agreements while it deals with tightening credit from its vendors.

The moves renewed the specter of bankruptcy hanging over the Richmond, Va.-based company as it heads into a holiday shopping season that could determine its future, amid slower consumer spending that has even the least vulnerable retailers worried.

"The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors," James A. Marcum, vice chairman and acting president and chief executive said in a statement. "The combination of these trends has strained severely our working capital and liquidity."

Marcum called the decision to close stores "difficult, but necessary."

Based on nearly 43,000 employees as of Feb. 29, 17 percent could be up to about 7,300 workers. But the company said the number would likely be lower in part because employees in some markets may become employed at other stores. It would not give further details.

Circuit City shares, which have traded under $1 for more than a month, rose 10 cents, or about 40 percent, to 36 cents in midday trading Monday.

The company said it expects the stores it is shuttering, which generated about $1.4 billion in net sales in fiscal 2008, will not open on Tuesday and store closing sales will begin Wednesday.

Circuit City spokesman Bill Cimino said the decision to pull out of 12 markets was based on store performance.

"There are some markets where we have more competitors, there are some markets where we have less competitors, in all, we're closing 155 stores that were underperforming," Cimino said.

Circuit City also noted restrictive actions taken by its vendors, including limiting credit for purchases. The company said it is working to secure support from vendors, but the "current mix of terms and credit availability is becoming unmanageable."

It also said it has been unable to collect an income tax refund of about $80 million that Circuit City believes it is owed from the federal government.

Standard & Poor's Equity Research analyst Michael Souers told investors that Circuit City's decision was "rational and necessary to attempt to conserve capital," but said restrictive measures by some vendors may "ultimately prove too challenging."

"We think there is a fair chance (Circuit City) will be forced to file for Chapter 11" bankruptcy protection, Souers wrote.

The company has had only one profitable quarter in the past year, posting a wider second-quarter loss in September with a 13 percent decline in sales at stores open at least a year. Its results have weakened as the company faces significant declines in traffic, heightened competition from rival Best Buy Co. and others and a weakened brand position.

Circuit City, which is exploring strategic alternatives, has also been working with advisers to determine how to substantially improve its operating and financial performance.

The company said last week it received a warning from the New York Stock Exchange that its stock price is not high enough for continued listing. The NYSE said the shares had an average closing price of less than $1 over 30 consecutive trading days as of Oct. 22, falling short of the exchange's requirement. Its shares have closed under a dollar since Sept. 30, when they fell to 76 cents. Shares have traded between 17 cents and $8.24 in the last year.

In order to regain compliance with the NYSE, Circuit City's common stock share price and the average share price over a consecutive 30-trading-day period must both exceed $1 within six months of it receiving the notice.

A major Circuit City shareholder - Classic Fund Management AG, a Liechtenstein-based asset management company - also said last week that it cut its holdings to 8.2 million shares, or about 4.8 percent of the company, from 9.5 million shares, or 5.6 percent.

Circuit City has been under new leadership since late September when Chief Executive Philip J. Schoonover agreed to step down. He was replaced by Marcum.

[iphyt4u]

After they go out of business, who do you return your stuff to? Holiday sales are going to be way down.

[nookreader]

Since the disgusting firing of Circuit City sales people, for no other reason than their wage level, I have bought over $5,000 worth of electronics....all at other stores.
I will never buy another thing at Circuit City until they make those people whole.

[hennighg]

Tax breaks for corporations, eh? Compassionate conservatives, ay? This Circuit City thing is emblematic of the last 8 years. Trickle down? Since we haven''t had the trickle down from the Reagan years yet, won''t people please wise up? The pocket book is not the only gauge of good leadership. However, Mr. Bush, et al, aren''t even good at that.

[txgrouch2007]

The Phil Gramm Store called and left the following comments on my answering machine:

Circuit City is just a bunch of WHINERS. This recession is all in their imagination, they''re making it a self-fulfilling prophesy by taking away jobs just when people need them the most, what with the REAL economy growing by leaps and bounds.

It''s just negative bias in the news media making people THINK the economy is bad, so they stopped spending money and now they''ve MADE it bad. This show the obvious liberal bias in the news media, because it''s all a deliberate plan to make people vote against the GOP.

So in conclusion, he says we should vote for McCain and stay the course, the fundamentals of the economy are strong, and if people would just go shopping more they''d get a better job.

P.S.: Phil Gramm STILL thinks his 1999 banking deregulation bill was a good idea.

[txgrouch2007]

After they go out of business, who do you return your stuff to? Holiday sales are going to be way down.
Posted by iphyt4u at 06:10 PM : Nov 03, 2008

They''re closing 20 percent of their stores. The OTHER 80 percent are still open - for now.

So, you''ll just drive to a DIFFERENT Circuit City store.

Which is a bummer if you live in Phoenix or Atlanta, because that will mean DRIVING TO A DIFFERENT CITY.

Yah, holiday sales could be down in those cities...

[txgrouch2007]

Since we haven''''t had the trickle down from the Reagan years yet, won''''t people please wise up? Posted by hennighg at 07:28 PM : Nov 03, 2008

You know, with all that''s going on today, it''s REALLY SAD that you have to go all the way back to Reagan to find something to criticize... LOL!

[lucy-in-tx]

Uh, huh.. and if you will look at it in another way in 20-25 years practically the only stores around will be Walmart, Sam''s Club, and maybe McDonald''s.
All Walmart needs to do is sell cheap housing, have discount funerals, and sell autos to dang near corner the entire consumer market.

[messiahx4eve]

Remember this story when you go to vote tomorrow, FOUR MORE YEARS OF THE SAME INSANITY IF MCCAIN & PALIN GET ELECTED. Now you know why bush has stayed away from the side of insane mccain, it would be a REMINDER of the PAST EIGHT YEARS OF TOTAL FAILURES IN ECONOMIC PRACTICES. It was planned this way from the beginning of mccain''s bid for the white house. REMEMBER the past 8 years and let it sink into your head as you go to vote. Sarah Palin is a deathwish waiting to happen. Vote tomorrow but VOTE SMART. NO MORE REPUBLICAN FAILURES WITH OUR LIVES AND OUR CHILDREN''S LIVES!!!!!

[hypnotoad72]

Reality check:

http://weblog.infoworld.com/realitycheck/archives/2008/02/the_three_presi.html

[voidmaster-2009]

I think we will see much more of this. The American economy is built upon continued growth. Without it, even otherwise successful businesses will fail. The problem is, such growth cannot be sustained by a consumer base that years ago spent so far beyond its means that it is now impossible for it (consumer base) to recover without major defaults.

This cannot be fixed without suffering. It was brought on by a greedy market, unscrupulous investors and consumers consumed by an %u2018I-want-it-now%u2019 mentality (note the previously thriving rent-to-own market).

Buying on credit necessarily has to stop. One should not leverage anything beyond a house or a car. And even then, mortgages should not exceed eight to ten years -- tops and a car loan, no longer than two.

[voidmaster-2009]

By the way, what makes Obama''s strategies socialist are not the taxes, but the regulations. Unfortunately, Wall Street and the like have proven that regulation is necessary -- that is, if such entities are to retain their societal importance.

McCain will necessarily have to take the same regulatory approach. The greater problem is, neither of these candidates will ever get passed regulation that is effective. Such regulation would have to be so draconian that it will never clear Congress intact. What will come out will be a watered down list of dos and don''ts.

Neither major candidate has any really prospect of fixing anything with the economy. At least with Obama, there ought to be a sense of hope that could ultimately do some good. But that is contingent upon the American people seizing upon that hope and making good use of it -- long term. And their track record of doing such things long term, frankly, sucks.

[txgrouch2007]

NO MORE REPUBLICAN FAILURES WITH OUR LIVES AND OUR CHILDREN''''S LIVES!!!!!
Posted by messiahx4eve at 08:52 PM : Nov 03, 2008

Republicans do not have a majority in either house of Congress. Whatever Congress does, the Republicans didn''t do it themselves.

Whatever Congress has done in the past two years, it had to have Democrat support.

I agree, Congress has created a disaster in this country. The fact that Republicans don''t have a majority means that DEMOCRATS ARE AS MUCH TO BLAME as Republicans.

Most notable is Barney Frank, who led opposition to Repubican calls for stronger regualtion of Fannie Mae and Freddie Mac BEFORE the "affordable housing" meltdown happened.

Frank is running for re-election this year. Do you think he''ll get another term in office after this disaster that HE PERSONALLY engineered?

What do YOU think???

[voidmaster-2009]

Frank is running for re-election this year. Do you think he''''ll get another term in office after this disaster that HE PERSONALLY engineered?

What do YOU think???

Posted by txgrouch2007
***
He will likely win reelection. Constituencies typically like their own guy, regardless how bit an ashhole he is.

Another thing that helps incumbents get reelected even when they have been naughty is the average American''s attention span -- or lack thereof.

Not so long ago, the vast majority of American citizens told their Congressmen and Senators to vote against the financial bailout. That bailout passed with as much overwhelming support from Congress as it had opposition from the people.

You would think that there would be a backlash to such arrogance. But there won''t be. And by the time the next president is sworn in, most of those who voted will have gone back to ******** about their jobs or lack of same.

[jsutaguy]

Circuit City is the first, but will not be the last, large company to discover that when you fire all of your experienced employees, using the skewed labor laws and lack of attention created by the Bush administration, you begin to suck. Hard. And then suddenly your seemingly cash rich organization is going bankrupt, while SIMULTANEOUSLY having permanently alienated your customers.

Oh yeah, Circuit City is going down, but they will likely have a lot of company....I''m thinking here about several companies that have aggressively outsourced American jobs to unqualified, inexperienced, but wildly cheap foreign labor....much of which was obtained by abusing and lying about the H1-B Visa program.

You can''t just screw all the workers of the USA and think things are going to just work out for you, idiots.

[longtree-2009]

interesting that job losses are taking place all over except for telecom and probably cause no one wants to give up either their land line or cell or both. funny that the wall street types, executives, ceos, those making 6 figure salaries and more, and the like all have golden parachutes so even if they lose their job they get to live like kings and queens compared to the rest of us.

[mrjustice1]

HARSH-SOUNDING PROPOSAL?
We must imprison and probably execute, many of the cheating, ''investment-banker''-WallStreet(as well as ''off Wall St'')-parasites, along with their lawyers, who with their ''marketing'' capabilities, schemingly stole our country and our futures.
They''ve destroyed the finances of so many, from widows to orphans, to the average person. Hence, such required cleansing action is not too harsh at all, considering the financial ruin in which they''ve left our entire humanity.
The number of their victims ranges from tens of millions in America, to hundreds of millions, and likely billions, globally!
We call upon our government leaders on a worldwide basis to bring these criminals to justice.
JUSTICE MUST PREVAIL!

[hennighg]

I''ll try this again. Someone didn''t like it before, but the truth is, this is the trickle down. Not money. Job losses. The rich get the $700 billion dollar bailout from taxpayers, who lose there jobs whenever the rich have a hiccup. This is your compassionate conservatism: earn $250,000 or more or die and, as Ebeneezer Scrooge says, decrease the surplus population.

[txgrouch2007]

Not so long ago, the vast majority of American citizens told their Congressmen and Senators to vote against the financial bailout. That bailout passed with as much overwhelming support from Congress as it had opposition from the people.

You would think that there would be a backlash to such arrogance. But there won''''t be.
Posted by VoidMaster at 10:44 PM : Nov 03, 2008

Sad but true.

I will wait to see the results of the election before I pass judgement on the intelligence level of the average voter.

But I think we ALL know what is going to happen.

Hoping to be surprised - but not holding my breath.

[txgrouch2007]

the truth is, this is the trickle down.
Posted by hennighg at 11:13 AM : Nov 04, 2008

No, partisan troll. This is the OPPOSITE of trickle down.

This is the rich grabbing everything for themselves, so there''s NOTHING LEFT to trickle down.

And most of our government is made up of the rich.

Here''s something for you to ponder (that means THINK ABOUT IT, idiot):

Some famous Baby Boomers and their birth year

1946 Bill Clinton, George W Bush, Joseph Hazelwood, Henry Paulson
1947 Hillary Clinton, Arnold Schwarzenegger
1953 Jeff Skilling, Ben Bernanke
1955 Bill Gates
1961 Andrew Fastow

1946-1964 60% of the members of Congress (before the 2008 election)

[generey]

The rich get the $700 billion dollar bailout from taxpayers, who lose there jobs whenever the rich have a hiccup. This is your compassionate conservatism: earn $250,000 or more or die and, as Ebeneezer Scrooge says, decrease the surplus population.


--------------------------------------------------------------------------------

Posted by hennighg at 11:13 AM : Nov 04, 2008


$816 Billion bailout. (I HATE it that people continue to refer to it as $700 billion.....IT WENT UP PEOPLE!!!)

[generey]

I will wait to see the results of the election before I pass judgement on the intelligence level of the average voter.

But I think we ALL know what is going to happen.

Hoping to be surprised - but not holding my breath.




--------------------------------------------------------------------------------

Posted by txgrouch2007 at 01:09 PM : Nov 04, 2008

I too am waiting for the results to pass my judgement!

[txgrouch2007]

(I HATE it that people continue to refer to it as $700 billion.....IT WENT UP PEOPLE!!!)
Posted by GeneRey at 02:22 PM : Nov 04, 2008

Because that was the title of the bill when they voted on it.

And yes, within DAYS of being passed, the measure has been changed into something TOTALLY DIFFERENT from what we had been told.

Now the money will go to BUY STOCK IN THE BANKS instead of buying up unmarketable home loans as promised.

DOES IT SOUND LIKE A CONFLICT OF INTEREST for the government to own stock in businesses that IT REGULATES???

Why quibble over the exact dollar amount when OUR GOVERMENT IS BECOMING MORE AND MORE CRIMINAL BY THE HOUR...

[txgrouch2007]

I''''m thinking here about several companies that have aggressively outsourced American jobs to unqualified, inexperienced, but wildly cheap foreign labor....
Posted by justaguy11 at 01:15 AM : Nov 04, 2008

But, but, but --- CHEAPER IS BETTER!!! Isn''t it?

Yah, it''s amazing how the totally unqualified and incapable are willng to work SO MUCH CHEAPER than the skilled and experienced workers to LOST THEIR JOBS to them.

It''s even MORE amazing that the "money is everything" attitude of corporate American doesn''t seem to understand how this WRECKS THEIR BUSINESS in the long run.

[avigil2]

The problem with Circuit City is that their prices were a little too high for consumers while Best Buy always have competing prices.

[docpeter1953]

So much for the daily morning pep rallies. sure gonna miss these adolesent gatherings.

[tannerbird]

That is the thing to do if you cant stand the heat get out of the kitchen.

[tannerbird]

Just do not buy keep your money. If we can just get wall-mart to close we will be ok.

[txgrouch2007]

One less competitor for Wal-Mart and Bust Buy. Question - what will happen to prices when only one is left??
Posted by bob5ford at 04:56 PM : Nov 04, 2008

There HAS to be a WalMart. Who else would sell cheap products from China, now that WalMart forced Kmart out of business?

If WalMart raised prices, the Chinese would open their own ChinaMart and undercut WalMart.

That would not be a smart move for WalMart.

[oneworldusa]

The article fails to mention the sub-par customer service CC provides. CC apparently trains no employees with customer contact and hasn''t for years.

[pirmin3]

My experience with CC employees makes me glad they''re folding so many stores. A bunch of un-knowledgeable head hunters.

[willofla]

Circut City is expensive, more than most. If you want a great deal on electronics there are other places to go like Best Buy. They are high but not as high as Circut City. In my town there are two. Their parking lot is always empty. I don''t know how they pay their bills, or their employees. These people who work there can get a job most anywhere that sells electronics, like Sears, or at some mall store, maybe even Best Buy or Wal Mart. So let them go because unlike Wall Street and the liberal Democrats, America is a country of equality, you''re equal to go out a find a job, work to make some money, and equal to fail also. That''s the part of what our country stands for that Obama will never tell his followers, that they can fail and no one will bail you out of your troubles because that is not Constitutional.

[rational_1]

Think they''re in trouble now? Wait until Obama starts hiking their taxes so that they pay their ''fair share''. If you work for them, I''d suggest polishing your resume. Until (if!) you get your new job, you need not fear - the Obama-state will hold your hand, and make everything better.

[willofla]

What the American consumer needs is a store that carries something "different" which these days is an alien word. I can''t find a store that doesn''t carry exactly the same thing that all the other stores carry. So we sure don''t need another store like Circut City that carries the exact same thing that all the other stores carry. And the real problem is there might be a dollar difference between all these stores. That''s not "competition", another word that has been lefitized. Competition these days is building another store that sells the same thing all the other stores carry, but a dollar cheaper. The powers that be just don''t get it, the chain store management. They don''t ever think of selling stuff at a much lower price than another store just like them. Doing that might cause them to make their profit over a much longer time. See, that''s the way business used to be across the country. You got into business with the understanding that you won''t be seeing a real profit for at least the first ten years. But today if these stores don''t start making all the profit they can make the first few weeks or months, then the store management must''ve made a bad mistake somewhere. Like to many companies these days it''s all about making all the profit to the max right off the bat. After all they have their stock holders to think about (sic).