Circuit City mulls mass layoffs, store closures
Call it urban decay
Circuit City may lay off thousands of workers and shut down at least 150 stores to avoid filing for bankruptcy protection, according to reports.
The Wall Street Journal quoted unnamed sources as saying the second-largest US consumer electronics retailer is considering the culling as a way to get through the holiday season.
The company is also in talks with investment bank Rothschild to guide talks for emergency funding. Lenders have shown little interest in financing the company.
The paper reports Circuit City investors want to avoid filing for bankruptcy before the holiday shopping season, fearing customers won't trust its ability to honor extended warranties on products like laptops and TVs. Extended warranty sales make up a healthy percentage of Circuit City's profits.
"The management team, board of directors, and its strategic financial advisers are conducting a comprehensive review of all aspects of our business to determine the best method of accelerating our turnaround," Circuit City spokesman Bill Cimino told the WSJ.
Earlier this month, the struggling retailer announced it would cut back on the number of stores it planned to open by the end of this fiscal year, ending February 28.
The WSJ said Circuit City execs are also pondering how much money the company could raise by liquidating hundreds of millions of dollars in inventory.
The company last reported it had about 715 stores and outlets in the US and 772 in Canada. ®