- The Washington Times - Thursday, February 6, 2003

RICHMOND (AP) Circuit City Stores Inc. will cut about 2,000 jobs, or 5 percent of its work force, as it changes how it compensates its salespeople and closes more repair shops amid a sales slump, the electronics retailer announced yesterday.
The company also said it will relocate or remodel more stores this year.
The Richmond-based chain said that sales at stores open at least a year fell 2 percent in January compared with the same month last year. Taking that decline into account, the company said it expects earnings for its fourth fiscal quarter to amount to 35 cents to 40 cents a share from continuing operations before one-time charges.
That range would be below the current Thomson First Call consensus estimate of 47 cents a share.
In trading on the New York Stock Exchange, Circuit City shares fell 73 cents, or 11.1 percent, to close at $5.86.
As part of a change in its marketing strategy, Circuit City said it will stop paying commissions to its salespeople and instead will pay all store employees an hourly wage. The company said the change will allow it to simplify store operations, cut operating costs and serve customers better.
The company said its customers are increasingly knowledgeable about electronics and technology and are less reliant on salespeople for information. In addition, the company said its beefed-up employee-training program will allow hourly employees to help customers as well as commissioned salespeople could.
As part of the changeover, the company will convert some commissioned salespeople to hourly pay but will eliminate about 3,900 sales positions. At the same time, the company said it will hire "additional hourly product specialists as necessary" and one additional sales manager at each of 400 of its stores.
The changes "will result in a net reduction in sales staffing of approximately 1,800 positions in Circuit City's 626 stores," which amounts to slightly less than three jobs per store, the company said.
The company expects to incur a one-time charge of $16 million for severance costs related to the change.
Circuit City said it also plans to close 10 more of its product-repair locations as part of a continuing reduction of that segment of its business. Those closings will eliminate an additional 200 jobs.
pany will record unspecified charges for lease terminations and severance.
The company, which employs 42,000 people overall, said it will move 18 to 22 stores over the next year.
In addition, Circuit City said it will finish remodeling 200 stores and will open about eight new stores during the year. The cost of those remodelings and relocations should amount to about 21 cents a share for the year, the company said.
"Decisions related to work force reductions are always difficult to make," said W. Alan McCullough, chairman and chief executive officer. "However, for organizations to thrive, we must understand the external environment and adapt our internal structures to the given conditions."

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