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November 3, 2008
2 Min Read
Struggling electronics retailer Circuit City said Monday that it plans to close 155 domestic retail outlets and lay off 17% of staff as it seeks to shore up liquidity in the face of a lagging consumer economy.
"Due in part to its deteriorating liquidity position and the continued weak macroeconomic environment, the company has decided to take certain restructuring actions immediately," Circuit City said in a statement.
Circuit City had about 43,000 workers as of February, meaning that it could slash more than 7,000 positions.
Circuit City last month reported a second-quarter loss of $162.7 million. Following the disclosure, "the company's liquidity position and the sharply worsened overall economic environment led some of Circuit City's vendors to take restrictive actions with respect to payment terms and the credit they make available to the company," Circuit City said.
In some cases, Circuit City's suppliers are insisting on payment before shipping inventory to the company, Circuit City disclosed. The company also said it has unsuccessfully sought an $80 million tax refund it believes it's owed by the federal government.
Stores to be closed include locations in and around major hubs like San Francisco, Los Angeles, Dallas, and New York City. Circuit City also said it would not open 10 stores that it had previously planned to launch in the current fiscal year.
Stores targeted for closure will not open Tuesday, and will hold going-out-of-business sales beginning Wednesday. Circuit City said the sales would be completed no later than the end of the calendar year.
"We are making a number of difficult but necessary decisions to address the company's financial situation as quickly as possible," said Circuit City acting president and CEO James Marcum in a statement.
The company said it plans to continue to serve customers through its remaining stores and online at its CircuitCity.com Web site.
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