Circuit City Announces Plans to Close 69 Stores in Canada and the U.S

After reporting a $16 million dollar loss in the third quarter, Circuit City announces plans to close seven United States superstores, a Kentucky distribution center, and sixty-two store locations in Canada. The closings are in effort to improve Circuit City's financial performance in the coming year.

Chief executive, Philip J. Schoonover stated, "'Because of the intensified gross margin pressures that we saw in the third quarter within the flat panel television category, we launched efforts to accelerate the timing of planned initiatives to improve sales and gross margin, as well as improve the efficiency of our expense structure."

Circuit City is a Fortune 200 Company and the second largest consumer retailer in the United States. In 2003, Circuit City changed their pay structure from commissioned sales to a single hourly pay structure resulting in 3900 lay offs and company savings of over $130 million per year.

Circuit City did not release the list of specific store locations affected by the recent closing announcement as the company is still notifying employees about the closing. Once the information is made public, the affected stores will be closed for re-pricing and then re-opened to clear out existing inventory to the public.

It is estimated that around 1,000 employees will be displaced, including twelve employees at the Kentucky distribution center, and 280 at the seven unidentified United States Superstore locations.

In their fiscal year 2005 Annual report, Circuit City listed 42,425 hourly and salaried associates working in the United States and 3,521 associates in Canada.

The company also announced plans to shut down its Rapid Satellite business segment, which was currently on the market for sale. The Rapid Satellite business was purchased by Circuit City in 2005.

Circuit City currently operates through six hundred and forty-three Superstores and twelve other store locations in 158 United States markets. The international segment has more than eight hundred retail stores and dealer outlets in Canada. Circuit City also sells a full line of products online.

Financial analyst, Dan Wewer of Raymond James & Associates approved of Circuit City's restructure in a research brief. "We believe it is critical for all consumer electronics retailers, including Circuit City, to lower their cost structure given ongoing pressures on gross margin rate. Frankly, we had anticipated Circuit City would look to close all of its Canadian businesses given their poor performance."

More information about Circuit City may be obtained at www.CircuitCity.com