CONSUMER ELECTRONICS Circuit City will close 19 superstores
Electronics retailer is shedding poor-performing locations.
RICHMOND, Va. (AP) -- Circuit City Stores Inc., the nation's No. 2 chain of consumer electronics stores, said Wednesday it will close 19 superstores, five regional offices and a distribution center by the month's end as it attempts to improve its lagging finances.
The retailer also said it has sold one of its buildings in its Richmond, Va., corporate campus.
W. Alan McCollough, Circuit City's chief executive officer, said an analysis showed that the poor-performing stores are in locations that can no longer support the chain's superstores.
"The repositioning of our stores within these markets continues, and it no longer makes financial sense to keep some of the stores in those markets open," McCollough said in a statement.
Spokesman Bill Cimino said the retailer announced a similar round of store closings last February. The new closings, he said, are not related to the announcement Tuesday that Circuit City received a $3.25 billion buyout offer from Highfields Capital Management LP, a Boston Investment firm that has a 6.8 percent stake in the retailer.
Circuit City's board of directors is evaluating the $17-a-share bid from Highfields, which believe the retailer's operations will improve if it is taken private.
Circuit City said it plans to close four stores each in Michigan and Ohio; three stores in Illinois; two stores each in Texas and Indiana; and one each in Wisconsin, Kansas, Tennessee and Virginia.
A distribution center in Doswell, Va., will be shuttered, as will small regional offices in Miami, Dallas, Detroit, Charlotte, N.C., and Cincinnati, Ohio.
The regional offices employ only a handful of people, but the stores employ about 370 full-time and 540 part-time workers. Some of them may be able to get jobs at other Circuit City stores in the market, the company said.
Less likely to find positions within Circuit City are the distribution center's 63 employees. The retailer has no other distribution facility in the area.
Circuit City expects after-tax expenses of about $30 million for the closings of the stores and regional offices. Expenses associated with the distribution center are not expected to be material, the retailer said.
The 19 stores had combined sales of $170 million for the 12-month period ended Dec. 31, 2004.
Circuit City also said it has sold a corporate building at its headquarters. The sale resulted in an after-tax gain of about $1.8 million, and the elimination of $12.6 million of long-term debt.
In trading Wednesday morning, Circuit City shares slipped 2 cents to $16.51 on the New York Stock Exchange. The stock has traded in a 52-week range of $10.18 to $17.87.