[Vision2020] the Big Box race to the bottom

[Mark Solomon]

As the business and consumer maxim says: you get what you pay for.

m.
*******
Circuit City to Cut More Than 3, 500 Jobs

By THE ASSOCIATED PRESS
Published: March 28, 2007

Filed at 10:28 a.m. ET

RICHMOND, Va. (AP) -- Circuit City Stores Inc. said Wednesday it 
plans to cut costs by laying off about 3,400 store workers and hiring 
lower-paid employees to replace them, and by trimming about 130 
corporate jobs.

Its shares rose 3 percent in morning trading.

Circuit City, the nation's No. 2 consumer electronics retailer behind 
Best Buy Co. Inc., the store workers being laid off were earning 
''well above the market-based salary range for their role.'' They 
will be replaced with employees who will be paid at the current 
market range, the company said in a news release.

''We are taking a number of aggressive actions to improve our cost 
and expense structure, which will better position us for improved and 
sustainable returns in today's marketplace,'' Philip J. Schoonover, 
Circuit City's chief executive, said in a statement.

The Richmond-based company also plans to outsource its 
information-technology infrastructure operations to International 
Business Machines Corp., a move that is expected to cut IT expenses 
by more than 16 percent. About 50 of Circuit City's IT workers will 
move to jobs with IBM and remain on the Circuit City contract. The 
other 80 corporate positions will be cut.

The changes follow the company's announcement this winter of planned 
cost-cutting measures and management moves to improve sales and cut 
expenses.

In February, Circuit City terminated its lease on a previously closed 
distribution center in Columbus, Ohio, at a loss of $4.8 million, but 
the move is expected to cut costs associated with the lease by about 
$6 million. It also finished a previously announced closing of a 
Louisville, Ky., distribution center that was used primarily for 
store fixtures and signs.

In Circuit City's international operations, the company has hired 
Goldman Sachs to advise the company on strategic options for its 
InterTAN Inc. unit, which could include selling the business.

Circuit City closed about 55 stores in Canada in February as 
previously announced, and expects to close about 10 more stores in 
the first half of fiscal 2008.

Its shares rose 59 cents to $19.47 in morning trading on the New York 
Stock Exchange.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mailman.fsr.com/pipermail/vision2020/attachments/20070328/0e1beeeb/attachment.html