Circuit City To Close Stores, Shuffle Management
Circuit City announced a series of store closures and management changes it hopes will better align the company to address changes in the CE retail market and to improve its financial performance.
“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,” said Philip J. Schoonover, chairman, president and chief executive officer of Circuit City Stores. “We now have completed the planning work and are taking immediate action on the first of those recommendations. Other recommendations are being developed, and we expect to implement them over the next six months. The steps we are taking today represent the initial efforts toward getting our cost structure more in line with today’s marketplace.”
The company expects to incur pretax expenses of approximately $30 million related to store and other facility closings, both domestic and international; $40 million to $60 million related to goodwill impairment; and approximately $15 million related to other restructuring activities. Of the total range of $85 million to $105 million, substantially all of the expenses will be incurred in the fourth quarter of fiscal 2007. As the company continues to move forward on its initiatives, additional expenses could be incurred in the fourth quarter, the company reported.