Circuit City closes 155 stores

Electronics retailer Circuit City announced it is pulling the plug on about 20 percent of its US stores, in an attempt to conserve cash and return the company to profitability. ┬á The Richmond, Virginia based retailer said the closures will reduce the companyÔÇÖs domestic work force 17 percent by shutting 155 of its more than 700 stores in 55 markets, including Phoenix and Atlanta, by the end of the year. ┬á Circuit City also said it will reduce new store openings and plans to work with landlords to renegotiate leases, lower rent, or terminate agreements, as the global financial crisis makes it more difficult for manufacturers to supply Circuit City with the merchandise it needs to get through the holidays. ┬á The company plans to close stores on Tuesday, and begin store closing sales on Wednesday. The closing stores generated net sales of about $1.4 billion for fiscal 2008, and the company has reported six straight quarters of falling sales with only one profitable quarter in the past year. ┬á Last week Circuit City said that the New York Stock Exchange had warned the company that Circuit City shares had an average closing price of less than $1 over thirty consecutive trading days, a price not high enough to continue listing.┬á The companyÔÇÖs sales have weakened due to significant declines in traffic, a weakened brand position, and increased competition from rivals Best Buy Co. and Wal-Mart Stores Inc. ┬á James Marcum, acting president and CEO said in a statement, ÔÇ£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.ÔÇØ ┬á The move to close stores as the holiday season approaches could well determine the companyÔÇÖs future, as the slowdown in consumer spending has worried all retailers. ┬á Marcum says the decision to close stores was ÔÇ£difficult, but necessary.ÔÇØ