Spread this message with Digg, Del.icio.us, Reddit, or Stumbleupon, and subscribe to the RSS Feed to track articles

Circuit City to Close Stores, Slash Jobs

Published 11/04/08 Dustin Ensinger - Print Article
E-mail - editor@economyincisis.org

Bracing for what is sure to be an anemic holiday shopping season, the nation’s number two consumer electronics retailer, Circuit City, announced that it would be closing numerous stores and cutting thousands of jobs in a cost cutting move the company hopes will allow it to stave off bankruptcy.

Circuit City will close 155 stores by year’s end in 55 different markets. Some closures could come within weeks. Overall, the closings represent 20 percent of the company’s stores nationwide. For the time being 566 stores will remain open.

Roughly 17 percent of the retailer’s workforce, or roughly 7,300 employees, will be affected by the cuts.

The company has been battered by the nation’s economic woes as consumers have reined in spending, credit has tightened and fear and uncertainty have run rampant. In the second quarter the company lost $162.7 million and is on the verge of being delisted from the New York Stock Exchange as it has been unable to propel its stock price above one dollar.

Circuit City is hoping that the store closings and job cuts, in addition to delaying new store openings and renegotiating leases with landlords, will allow the retailer to conserve enough capital to avoid Chapter 11 bankruptcy.

"Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply,” James Marcum, the Richmond, Va., company's vice chairman and acting president and CEO, said. “The weakened environment has resulted in a slowdown on consumer spending, further impacting our business as well as the business of our vendors."

Source Write Words Here">The San Francisco Chronicle:

Hammered by an economy in which consumer spending is coming to a screeching halt, credit is hard to get and competition is heightening, Circuit City said Monday that it is closing 155 stores, 10 of them in the Bay Area. The closures could put as many as 7,300 employees out of work in what is becoming one of the worst of times.

The announcement was but one more piece of bad news about the tumbling economy and demonstrates the vulnerability of consumer electronics stores when many people are spending only for food and other necessities.

Click Here For Solutions To America's Economic Problems

Click here to contact your Representative in Congress.

Unless the above article is already copyrighted, this article is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License, EIC grants permission to use this article in whole or in part provided attribution is given, preferably in the form of a link back to EconomyInCrisis.org.