Channel Register

Circuit City fires 3,500 'overpaid' staff

Cheap but not cheerful

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Circuit City is firing 3,400 store workers because it thinks it's paying them too much. To rub salt into the wound, it is offering the retail fat cats some severance and the chance to apply for their old jobs - at lower wages. But only 10 weeks after they have been fired. This company is all heart.

According to Circuit City, America's second biggest electronics retailer, the pink slipees - about eight per cent of the company's staff - are earning "well above the market-based salary range for their role". Remember, these are store workers we are talking about. And it will replace them with people at the going market rate.

In further cost-cutting moves, the company today revealed its intent to outsource IT infrastructure operations to IBM in a $775m seven-year deal. IBM is taking on 50 IT peons from Circuit City, but another 80 will lose their jobs. Circuit City expects to reduce IT costs by 16 per cent over the course of the contract.

Wall Street marked the retailer's shares up two per cent today on the news.

Last month, rival retailer CompUSA decided to shut down more than half of its stores in US and Puerto Rico. ®

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