- The Washington Times - Thursday, February 8, 2007

2:13 p.m.

RICHMOND (AP) — Circuit City Stores Inc., the nation’s No. 2 consumer electronics retailer, said today it plans to close seven U.S. superstores, a Kentucky distribution center and 62 company-owned stores in Canada to cut costs and improve its financial performance.

The Richmond retailer blamed the lowered prices of flat-panel televisions for its financial woes.

“Because of the intensified gross margin pressures that we saw in the third quarter within the flat-panel television category, we launched efforts to accelerate the timing of planned initiatives to improve sales and gross margin, as well as improve the efficiency of our expense structure,” Chief Executive Philip J. Schoonover said.

Shares of Circuit City rose $1.10, or 5.3 percent, to $21.70 in morning trading on the New York Stock Exchange.

The closings will take place over the next six months at an expected total cost of $85 million to $105 million, all to be incurred in the current fourth fiscal quarter, which ends Feb. 28, Circuit City said.

Circuit City would not identify the stores to be closed because company officials were in the process of notifying employees. The stores will be closed Monday, then reopen Wednesday for clearance sales, spokesman Bill Cimino said.

The company could not immediately determine the exact number of employees who would lose their jobs. The distribution center employs 12 persons, and each of the seven Superstores slated for closing employs about 30 full-time and part-time workers, Mr. Cimino said.

Circuit City operates through 643 Superstores and 12 other locations in 158 U.S. markets. The international segment has more than 800 retail stores and dealer outlets in Canada. The company also sells it products online.

The retailer, second behind Best Buy Inc., also is realigning its management structure. It named a new merchandising officer, David L. Mathews, who replaces Douglas T. Moore, executive vice president and chief merchandising officer. Mr. Mathews will be head of merchandising, marketing, services and supply chains. George D. Clark Jr. will lead Circuit City’s retail channels.

Circuit City has long struggled for market share against Best Buy, and analysts have said each of Best Buy’s locations bring in about twice as much revenue as its smaller rival. Both have seen fierce competition from Wal-Mart Stores Inc., which lowered prices for key products such as flat-panel televisions during the Christmas shopping season, forcing Circuit City and Best Buy to follow suit and cutting into their third-quarter results.

Circuit City lost $16 million in the third quarter. Best Buy’s third-quarter profit rose nearly 9 percent to $150 million. Circuit City will report its fourth-quarter results in early April, Mr. Cimino said.

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