Circuit City to Shut Down 19 of Its Electronics Stores

Circuit City Stores Inc., the second-largest U.S. electronics chain, said Monday that it would close 19 money-losing superstores and eliminate 901 jobs but would continue to open and remodel outlets in other locations.

Circuit City expects to have about $35 million in after-tax expenses related to the Feb. 23 closings, the Richmond, Va.-based company said, adding that it concluded that the stores, about 3% of Circuit City locations, were unlikely to generate positive cash flow. The only California store to be closed is in Westwood.

The 19 stores were shut Monday to prepare for closeout promotions starting today, the company said. Chief Executive Alan McCollough has been upgrading stores and opening new ones with brighter lighting and wider aisles to try to stop losing customers to the newer outlets of Best Buy Co., the largest U.S. electronics seller.

“In the long term it will certainly be to their benefit to get out of areas where they are underperforming and focus on the areas where they are doing better,” said Gerald Van Horn, who helps manage $1.2 billion of assets at Stratton Management Co., including Circuit City shares. “It’s certainly a positive.”

The stores being closed had revenue of $151 million last year. The move will affect 360 full-time and 541 part-time employees, company spokesman Steve Mullen said. The company has about 40,000 employees.

Circuit City will have 600 superstores and five outlets in malls after the closings. It expects to open as many as 70 superstores in the fiscal year beginning in March, with slightly more than half of those being relocations of existing stores. The new stores will be larger, with an average space of 35,000 square feet, Mullen said.

Shares of Circuit City rose 45 cents to $11.23 on Monday on the New York Stock Exchange.

The closings follow a 2% decline in December in sales at stores open at least a year, while rival Best Buy’s same-store sales rose 9.3% during the month.

So-called same-store sales are considered a key indicator of a retailer’s business because they exclude results from new and closed locations. The 19 stores to be shut are in 14 states, with two each in Ohio, Texas, Indiana, Illinois and Florida.

In the quarter ended Nov. 30, Circuit City had net income of $1.47 million, contrasted with a loss of $17.8 million a year earlier.