Circuit City to close 155 stores, cut US jobs.

By MICHAEL FELBERBAUM, Associated Press Writer Michael Felberbaum, Associated Press Writer – 1 hr 40 mins ago

RICHMOND, Va. – Circuit City Stores Inc. said Monday it is closing about 20 percent of its U.S. stores — 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.

once , I was in one of these stores.....years ago...the service sucked and the selection was sub-par compared to other stores. The pricing was 5% to 20% higher, as well.

i agree-for the same reasons i never shop there, not even online

this doesn't surprise me

everything was over priced and they treated Black customers like second class citizens

everyone one I knew that shopped there and was of color has told me the same thing about being treated like crap...

I stopped shopping there years ago and most of the stores in this area are already closed....

That's terrible, HeartSoul.

This company in THIS area is extremely overpriced and they have a 15% restocking fee for returns!!!

To HELL with them!! I hope they go out of business and let "mom and pop" have the customers again!!!

I'm bothered by the fact that up to 7,300 people will be losing their jobs at such a difficult time.

St. Louis had 2,000 people lose their jobs because a car plant closed and there's more.

It's just such a bad time to be losing one's job.

People are complaining about people losing their homes because they are stupid. Well, lots of people are losing their jobs!

when is it a good time to lose your job?

Never. But..it's more difficult to find a new job now.

stop spreading the lies winx



Nonfarm payroll employment declined by 159,000 in September, and
the unemployment rate held at 6.1 percent, the Bureau of Labor Sta-
tistics of the U.S. Department of Labor reported today. Employment
continued to fall in construction, manufacturing, and retail trade,
while mining and health care
continued to add jobs.

It's just the beginning. There'll be many more layoffs over the next few months. Corporations have been surviving the last few years by constantly trimming excess. They are about all trimmed down and the only way left to save money is by reducing payroll

Until now the oilfield was the last area booming in America. It's impossible to find a house for sale or an apartment for rent around here.

But now even the oil companies are starting to lay people off and are not renewing contracts with the service companies

i spent alot of money there years ago. over 6000 in 1 year, just on a couple of things, i than sold my car, and they wanted 200 to remove the alarm i just put in 2 months before i wanted it taken out. i spent a total of 996 on the alarm, the shock sensor, motion sensor, etc. and installation than they wanted 200 to take it out, that was the last time i shopped there.

it is terrible
I feel for the people that will lose their jobs

wonder what the issue is

two at least post they are overpriced (why is that)

a.) greed

b.) stupidity

c.) they are not connected to the best suppliers

d.) their line of credit was called cause they are not connected well enough in the banking world

e.) a and b

f.) c and d

g.) all of the above

In my city it's been difficult to find jobs. Michigan and other places have had it bad too. It doesn't help that we are bordering on a recession.

And thanks for being rude.

My mother's company is down to the skeleton on workers. Hospitals have cut back too.

Yes, all of the above. I, myself, like Best Buy better.

But...it is unfortunate for up to 7,300 people to be losing their jobs.

What...rude??? i used the laughing emoticon....???/

You accused me of telling lies.

Bureau of Labor statistics says it is not harder to find a job..NOW

You stated it IS more difficult.....now....