Circuit City to close 155 underperforming stores by year end
Circuit City, the 60-year-old Richmond, Va.-based consumer electronics chain has decided to close about 20% of its American stores in an effort to return to profitability.
The company, said that it would close 155 underperforming stores out of its more than 700 stores in 12 markets, including Phoenix and Atlanta, by year end, laying off about 17 percent of its domestic work force. However the company declined to specify the number of employees affected.
According to an estimate, the closures could put as many as 7,300 employees out of work in what is becoming one of the worst of times.
The Circuit City executives blamed weaker retail spending and the deepening credit crunch for the decision. The company has had only one profitable quarter in the past year and posted a wider second-quarter loss in September, with a 13 percent decline in sales at stores open at least a year.
Apart from this, Circuit City a plans to reduce store openings and planned to work with landlords to renegotiate leases, lower rent or terminate agreements.
Circuit City will continue to operate 566 stores in the United States, including 10 in the Bay Area. The Shares of Circuit City rose 10 cent, or 38%, in trading yesterday to end at 36 cents per share. The share prices of the company has plummeted more than 90 percent this year.
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