Circuit City closing 155 stores
Portland Business Journal
Circuit City Stores Inc.'s plan to close 155 domestic segment stores does not include the five stores in Oregon.
Richmond, Va.-based Circuit City (NYSE: CC) announced the closings on Monday and said the company is considering options to restructure its business,
"Due in part to its deteriorating liquidity position and the continued weak macroeconomic environment, the company has decided to take certain restructuring actions immediately, including closing 155 domestic segment stores, reducing future store openings and aggressively renegotiating certain leases," Circuit City said.
The company cited "waning consumer confidence and a significantly weakened retail environment," and said that its liquidity position "and the sharply worsened overall economic environment led some of Circuit City's vendors to take restrictive actions with respect to payment terms and the credit they make available to the company. Additionally, the recent disruption in the financial markets has contributed to certain of the company's vendors experiencing insurmountable challenges with obtaining credit insurance for the company's purchases."
To date, the company said, it also has been unable to collect an income tax refund of approximately $80 million that the company believes it is owed from the federal government.
For fiscal 2008, the stores that are being closed generated in total approximately $1.4 billion in net sales. "When results were viewed at the individual comparable store level, the closing stores, as compared to the stores remaining open, on average had lower net sales, a lower close rate and a lower gross profit margin rate. The stores, on average, were also unprofitable when marketing expenses were allocated to the individual store-level results," the company said.
Circuit City also plans to reduce new store openings. The company said it revised its store opening plans for the current fiscal year and will not open at least 10 locations that were previously expected to be opened. The company still expects to open up to two incremental stores during the remainder of fiscal 2009.
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