Consumer electronics chain Circuit City is implementing plans for massive layoffs and closing 155 stores this week. The technology retailer is joining a list of other businesses that have had to close their doors because of a weakening economy and a less-promising holiday shopping season.
Circuit City, the nation’s second-largest electronics store, said it will reduce its workforce 17 percent, close stores in 55 U.S. markets on Tuesday, and begin a liquidation process on Wednesday. Plans to open 10 new stores next year have been canceled. As of February, Circuit City had about 46,000 employees worldwide.
“We deeply regret the impact today’s announcement will have on our associates, our guests, and the communities where these stores are located,” said James Marcum, acting chief executive of Circuit City Stores. Marcum replaced ousted Circuit City president, CEO and Chairman Phillip Schoonover, who was let go last month after just two years at the company.
The news comes on the heels of a decision by Blockbuster not to acquire Circuit City for $1 billion.
“Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply,” Marcum said. “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 Stores said its second-quarterly results, its liquidity position, and the poor economy led vendors to impose restrictions on payment terms and credit for the company.
Executives say the unstable financial market contributed to the company’s demise by denying vendors credit insurance for Circuit City’s purchases. As a result, vendors were…