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Circuit City May Close 150 Stores

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The troubled Circuit City chain of electronics stores may close up to 150 locations to avert bankruptcy.

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By ASHLEY M. HEHER The Associated Press

The Tampa Tribune

Published: October 21, 2008

Updated: 10/21/2008 08:51 am

CHICAGO - Circuit City Stores Inc. may close at least 20 percent of its stores to shore up its finances and to avoid filing for bankruptcy protection, The Wall Street Journal reported Monday.

Citing "several people familiar with the matter," the Journal reported the nation's second-largest consumer electronics chain is considering closing at least 150 locations and trimming thousands of jobs to avert a Chapter 11 filing.

Closing dozens of stores would allow the retailer to liquidate $350 million in inventory that could be used to pay real-estate costs, including leases on abandoned sites.

Circuit City spokesman Jim Babb said the chain wouldn't comment on details of the report as it continues "a comprehensive review of all aspects of our business" in order to accelerate its turnaround plan and boost its financial and operating performance.

"As previously announced, this includes assessing the productivity of our asset base and making decisions that are in the best long-term interest of Circuit City and our stakeholders," he said in a statement Monday.

Investors appeared pleased at the report, sending Circuit City shares up more than 20 percent Monday morning - a small gain for the stock that's lost more than 90 percent of its value this year. But the rally faded and shares fell 4 cents, or 10.26 percent, to 35 cents at the close of trading.

The Richmond, Va.-based company is doing a comprehensive review as it works to operate as a standalone business while exploring strategic alternatives. It has had one profitable quarter in the past year. It posted a wider second-quarter loss with a 13.3 percent drop in same-store sales.

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