As we let you know yesterday, Circuit City is planning to close 20 percent of its stores, which equals 155 units to be shut down. Now we have additional details that have become clearer since our last story.
With the 155 stores that the company is closing, it will be exiting a total of 12 media markets across the US out of the 55 media markets that the company is currently in. The company claims that the 155 stores that are being closed are underperforming or are stores that are no longer a strategic fit for the company.
As part of the store closing initiative, the company is also not going to open 10 new locations that were expected to be opened during fiscal 2009, but two stores that were scheduled to open during fiscal 2009 are still on track to be opened as announced previously. Additional store openings will be suspended starting in fiscal 2010.
In an effort to help the company get back on track, Circuit City will be reaching out to the landlords in an attempt to renegotiate existing leases with the goal of lowering the rent. In some cases if rent reductions can not be obtained, the company will evaluate the situation and move to negotiate a termination of the current lease to exit.
With the store closures, the company will be reducing the overall payroll by about 17 percent of the domestic employees. The company will be embarking on a get tough strategy focused on cost reduction and will attempt to reduce operating expenses at every level and curb marketing expenses, as well.
The company will continue to evaluate all options and right now as far as we can tell nothing is yet off the table. As for the stores that are closing, it is expected now that these units will be closed November 4th and reopen on November 5th under liquidator control. No announcements have been made as to the liquidation sales of the merchandise in the stores slated for closure yet.