Circuit City Cuts More Jobs, 200 in Richmond
Friday, June 1, 2007
Circuit City Stores, the second-largest U.S. consumer-electronics chain, said it is cutting about 850 jobs in the United States, on top of 3,400 eliminated in March, as it realigns store management.
Circuit City said 654 of the positions will come from management as it adopts a policy of assigning managers based on sales volume, spokesman Bill Cimino said. Until now, each store had five managers regardless of revenue, he said. Now, stores will have from three to five managers each, based on revenue. The cuts will come from a combination of attrition, transfers and dismissals, he said.
The company said it is cutting 200 jobs at its Richmond headquarters, where it has about 3,000 employees. Circuit City has about 43,000 employees in the United States.
The company fired 3,400 of its most experienced hourly employees in March, about 8 percent of its workforce, after reporting its second consecutive quarterly loss. Problems with the bottom line emerged after a holiday price war with Best Buy and Wal-Mart over flat-panel televisions. The company said that it needed to cut costs and that it would replace dismissed employees with people willing to work for less money. It predicted that sales would be volatile through September as the new workers are trained.
Circuit City said it expects to post a first-quarter loss of $80 million to $90 million before taxes after its sales fell "substantially below plan." It expects to report results this month.
Circuit City is also accelerating store growth. It plans to open 165 stores this year after adding 38 net new stores in the past six or seven years, Cimino said.
The company is also expanding its Firedog technical repair and services staff, a rival to Best Buy's Geek Squad. Circuit City expects to finish the year ending in February with 3,900 Firedog staff members, up from 2,500 now. Revenue in the unit is expected to double this year, to $400 million, Cimino said. That's 3.1 percent of Circuit City's expected revenue this year.
Shares of Circuit City closed at $16.07, up 35 cents, on the New York Stock Exchange. The stock price has fallen 15 percent this year.