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2008-10-30  BUSINESS POST | Circuit City closing Alpharetta, Cumming, Duluth stores
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Store closings
North Point – 6290 North Point Pkwy., Alpharetta
Cumming – 320 Peachtree Pkwy., Cumming
Gwinnett Mall – 3850 Venture Drive, Duluth |
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November 03, 2008
Circuit City stores in Alpharetta, Cumming and Duluth aren't expected to open Tuesday, part of the consumer electronics retailer's first steps to restructure the company after waning consumer confidence and credit problems for the company.
Seventeen metro Atlanta stores are among the 155 stores Circuit City will close as it moves out of 12 markets. Starting on Wednesday the stores will reopen just for closing sales.
The retailer plans to reduce future store openings – down to two in 2009, and none starting in 2010 – plus renegotiate leases if it can for stores it is closing and even those that remain open in other markets.
The company blamed these factors for the closings:
• Waning consumer confidence and a significantly weakened retail environment hurting sales and gross profit margin higher than management anticipated;
• Vendors took restriction actions with respect to payment terms and credit made available to Circuit City, even in some cases making the retailer pay before shipment;
• The company has not been able to collect an $80 million income tax refund it believes it is owed by the federal governmnet;
James A. Marcum, vice chairman and acting president and chief executive officer of Circuit City Stores, said macroeconomic trneds have worsened sharply since late September.
"The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors. The combination of these trends has strained severely our working capital and liquidity, and so we are making a number of difficult, but necessary, decisions to address the company's financial situation as quickly as possible," Marcum said.
The 155 stores that were determined to be underperforming or were no longer a strategic fit for the company are in 55 U.S. media markets. Circuit City will exit 12 of those markets.
When results were viewed at the individual comparable store level, the closing stores, as compared to the stores remaining open, on average had lower net sales, a lower close rate and a lower gross profit margin rate. The stores, on average, were also unprofitable when marketing expenses were allocated to the individual store-level results.
The company expects the closing sales to be completed no later than year end. For fiscal 2008, the stores that are being closed generated in total approximately $1.4 billion in net sales.
Circuit City Stores Inc. (NYSE:CC) is a leading specialty retailer of consumer electronics and related services. At October 31, the domestic segment operated 712 Superstores and 9 outlet stores in 165 U.S. media markets. At September 30, the international segment operated through 770 retail stores and dealer outlets in Canada. Circuit City also operates Web sites at www.circuitcity.com, www.thesource.ca and www.firedog.com.
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