Circuit City today confirmed plans to lay off thousands of US workers and close 155 stores in order to survive the holiday season.
The consumer electronics chain will also reduce the number of future store openings and renegotiate leases on some of its remaining 566 locations.
Circuit City's scheme was first reported in The Wall Street Journal as the retailer's emergency plan to avoid a Chapter 11 bankruptcy filing.
The company has posted six straight quarters of decreasing sales and hasn't had a profitable quarter in over a year. The deteriorating economy and what retailers are anticipating to be a slow holiday shopping season has pushed Circuit City to drastic action.
Adding to Circuit City's woes is potential delisting on the New York Stock Exchange. The vendor was formally warned last week that its share prices had fallen below $1 for 30 consecutive trading days, and must notify the exchange within 10 business days of its intent to remedy the deficiency.
The company will liquidate inventory and shut down 155 US stores listed here (PDF).
About 17 per cent of its domestic workforce will by laid off as a result of the closures.
"We deeply regret the impact today's announcement will have on our associates, our guests and the communities where these stores are located," said Circuit City CEO James Marcum in a statement. "We truly are grateful to each of our associates for their many contributions to the company."
Store openings for the current fiscal year have been reduced by 10, leaving only two locations planned for the remainder of 2009. It also intends to stop store openings completely beginning in fiscal 2010.
Stores being closed will start liquidation sales on November 5. ®