Circuit City Shutting 155 Stores; Cutting Staff By 17%

The struggling electronics retailer seems to be pushing hard to stay out of bankruptcy, but it is clearly going to be a difficult road. The company this morning announced that it will close 155 U.S. stores, all of which will close tomorrow and then re-open on Wednesday to start store-closing sales.

Circuit City said that consumer confidence and the overall retail environment have impacted the company’s sales and gross profit margin to a greater degree than previously expected. The company said some vendors have become reluctant to extend credit to the company; some manufacturers are now demanding upfront payment before shipping goods. He says other companies have not provided “customary increases in credit lines for holiday purchases.” Circuit City said that “the current mix of terms and credit availability is becoming unmanageable for the company.”

The company also said that a third-party appraisal resulted in a reduction of the estimated liquidation value of its inventory.

Circuit City said that the stores that are closing generated FY 2008 sales of $1.4 billion; the store closings will result in the company exiting from a dozen media markets. The closings will reduce the company’s headcount by about 17%.