Circuit City will close 70 stores

Canada bears the brunt after flat-panel TVs produce fewer profits.

Mark Clothier
Bloomberg News

February 9, 2007

Circuit City Stores Inc., the second-largest U.S. electronics retailer, is closing 70 stores and eliminating about 400 jobs in the United States and Canada after profits from sales of flat-panel televisions shrank.

Eight locations in the United States and 62 in Canada will be closed, Circuit City said Thursday. The company also plans to shut a distribution center in Louisville, Ky.

Circuit City joined Best Buy Co., the biggest U.S. electronics chain, in cutting prices on flat-panel TVs during the holidays. Circuit City reported its first loss in six quarters in December, and Chief Executive Officer Philip Schoonover said profit margins will fall this quarter as well.

The closures will cost Richmond, Va.-based Circuit City as much as $105 million, with most of the charge coming in the quarter that ends this month. The company said it is accelerating previous plans to reduce costs, and may report more charges in the next six months.

At least 200 store employees in Canada will lose their jobs, along with about 70 in the company's Barrie, Ontario, support center, spokesman Bill Cimino said.

About 100 U.S. jobs will be cut, with some employees being reassigned to other stores, Cimino said. He wouldn't say which locations would be closed. One of the U.S. stores being closed will be replaced by a new store in 2008. The Kentucky distribution center employs 12.

Circuit City, which has about 46,000 employees, operates through 643 Superstores and 12 other locations in 158 U.S. markets. Fifty of its stores are in Florida, including 10 in Orlando.

Its international unit has more than 800 retail stores and dealer outlets in Canada. The company also sells its products online.