Circuit City Stores, Inc. has decided to take certain restructuring actions immediately, including closing 155 domestic segment stores, reducing future store openings and aggressively renegotiating certain leases.
The company also said that it was considering all available options and alternatives to restructure its business.
Circuit City Stores Inc. is closing 155 of its more than 700 U.S. stores by Dec. 31. The stores are spread throughout 28 states, including multiple locations in areas like Phoenix and Atlanta. It is laying off about 17 percent of its domestic work force, which could affect up to 7,300 people.
Circuit City also said it will further cut back on new store openings and plans to work with landlords to renegotiate leases, lower rent or terminate agreements while it deals with tightening credit from its vendors.
James A. Marcum, vice chairman and acting president and chief executive officer of Circuit City Stores, Inc. said, "Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply. 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, and so we are making a number of difficult, but necessary, decisions to address the company?s financial situation as quickly as possible."
Circuit City 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. It faces significant declines in traffic and heightened competition from rival Best Buy Co. and others.
Circuit City has also been working with advisers to determine how to substantially improve its operating and financial performance.
"The company is considering all available options and alternatives for the business. Consistent with this evaluation, the company will continue to take appropriate actions to conserve cash, reduce expenses and improve liquidity. In addition, the company is continuing to evaluate additional near-term cost reduction initiatives that may be necessary to address its financial condition. The company is also in negotiations with its lenders and other third parties regarding various financing alternatives," the company announced in a press release
The company plans to operate its business without interruption.