Circuit City Stores Inc. said Monday it is closing about 20 percent of its U.S. stores - cuttingthousands of jobs - in an effort to return the nation's No. 2 consumer electronics retailer toprofitability.
The Richmond, Va.-based company said it will shutter 155 of its more than 700 stores in 55markets, including 11 Ohio stores, by Dec. 31. Circuit City also said it will further reduce newstore openings and plans to work with landlords to renegotiate leases, lower rent or terminateagreements.
The Circuit City locations closing in Columbus include the stores on West Broad Street andHilliard Rome Road. The Circuit City stores in Grove City and Mansfield will also shut downoperations.
WEB EXTRA: List Of Closings (PDF)
The company said it expects the stores it is shuttering, which generated about $1.4billion in net sales in fiscal 2008, will not open on Tuesday and store closing sales will begin onWednesday.
The move comes as Circuit City heads into a crucial holiday shopping season that coulddetermine its future, amid a slowdown in consumer spending that has even the least vulnerableretailers worried.
"The weakened environment has resulted in a slowdown of consumer spending, further impactingour business as well as the business of our vendors," James A. Marcum, vice chairman and actingpresident and chief executive officer said in a statement. "The combination of these trends hasstrained severely our working capital and liquidity."
Marcum called the decision to close stores "difficult, but necessary."
Its shares rose 6 cents, or about 23 percent to 32 cents in early trading Monday.
Circuit City also provided updates on other aspects of its business, including restrictiveactions taken by vendors, including limiting credit for purchases. But the company said while it isworking to secure support from vendors, the "current mix of terms and credit availability isbecoming unmanageable for the company."
It also said it has been unable to collect an income tax refund of about $80 million thatCircuit City believes it is owed from the federal government.
The company has had only one profitable quarter in the past year, posting a widersecond-quarter loss in September with a 13 percent decline in sales at stores open at least a year.Its results have weakened as the company faces significant declines in traffic, heightenedcompetition from rival Best Buy Co. and others and a weakened brand position.
Circuit City, which is reviewing its operations while exploring strategic alternatives, hasbeen working with advisers to determine how to substantially improve its operating and financialperformance.
The company said last week that the New York Stock Exchange has warned it that its stockprice is not high enough for continued listing.
The NYSE said Circuit City shares had an average closing price of less than $1 over 30consecutive trading days as of Oct. 22, falling short of the exchange's requirement. Its shareshave closed under a dollar in trading since Sept. 30, when they closed at 76 cents. Shares havetraded between 17 cents and $8.24 in the last year.
In order to regain compliance with the NYSE, Circuit City's common stock share price and theaverage share price over a consecutive 30-trading-day period must both exceed $1 within six monthsfollowing receipt of the notice.
A major Circuit City shareholder - Classic Fund Management AG, a Liechtenstein-based assetmanagement company - also said in a regulatory filing last week that it cut its holdings to 8.2million shares, or about 4.8 percent, from 9.5 million shares, or 5.6 percent. It did not disclosea reason for the change.
Circuit City has been under new leadership since late September when Chief Executive PhilipJ. Schoonover agreed to step down. He was replaced by Marcum, who was tapped to oversee CircuitCity's multiyear turnaround efforts.
