Circuit City Files for Chapter 11; Still Open for Holiday Sales
Electronics retailer Circuit City announced recently that they were going to close 155 stores nationally in efforts to curtail their financial woes. According to a November 3 press release, "the stores identified for closure are located in 55 U.S. media markets, of which Circuit City will exit 12 U.S. media markets." Although not exiting California, they are planning on closing 24 stores in the state, including ones locally in Industry, Compton, Foothill Ranch, Thousand Oaks, Riverside, North Fontana, Pomona, Santa Maria, and Santa Barbara.
However, today's news brings word that the Virginia-based company needs to take their fiscal troubles to the next level, and are filing Chapter 11 bankruptcy. According to the Pasadena Star-News, this "will allow it to hold off creditors and continue operations while it develops a reorganization plan."
Circuit City explained the move via a press release issued today:
The company recognizes that, to achieve these objectives, there is a critical need to create a more efficient chain with a streamlined cost structure. As previously announced, the company is in the process of closing 155 domestic segment stores. This week, the company took action to realign its regional and district support structure commensurate with the smaller store base, which will include approximately 566 stores when the domestic segment store closings are completed. As a further cost-saving measure, the company reduced its corporate headquarters workforce on November 7, 2008. These corporate, regional and district support reductions totaled approximately 700 positions and are in addition to the reductions resulting from the store closings. The store closings and support workforce reductions will result in a combined domestic workforce and store base reduction of approximately 20 percent.
Despite the grim news of unavoidable unemployment for that 20 percent, the retailer assures its shoppers that they will take advantage of this time to stock up for the upcoming holiday shopping season and attempt to use these sales to boost their overall standing. Unfortunately for Circuit City, and many other retailers (and those hoping to get some seasonal work), this holiday shopping season; the forecast is for "flat-to-declining" sales levels as 2008 comes to a close.
Here's a list of the stores closing in California:
Photo of the Circuit City store sign in Burbank by Xurble via Flickr