Circuit City will close KC-area stores
Kansas City Business Journal - by Jerry LaMartina Staff Writer
Circuit City Stores Inc. will close 155 underperforming U.S. stores, including all five in the Kansas City area.
The closings represent about 21 percent of Circuit City’s 721 U.S. stores.
In a release Monday, the Richmond, Va., company (NYSE: CC) said the closings will result in a reduction of 17 percent of its domestic employees, but it didn’t give a number of layoffs or total employment. Circuit City spokesman Jim Babb said the company isn’t disclosing those numbers.
As of Feb. 29, the company had 42,974 U.S. employees, according to its annual report filed with the Securities and Exchange Commission. Using that employee number, the 17 percent reduction would be about 7,300 employees.
The company also didn’t say how much of a charge it expects to incur in fiscal 2009 for the closings and layoffs, but it said it is “evaluating the benefits and expenses associated with these changes.”
The company said it now plans not to open at least 10 locations that it had expected to open in fiscal 2009. Babb said he didn’t know whether the store planned to anchor a new development in Merriam was among them.
Phil Lammers, Merriam’s city administrator, said he didn’t know whether the Merriam store was among those Circuit City now plans not to open this fiscal year.
The Merriam Village Shopping Center is in the first phase of vertical construction after infrastructure work was completed, Lammers said.
If Circuit City pulls plans for the Merriam store, he said, the development will proceed.
“For the anchor, I think it’s just a matter of funding for the overall finance structure,” he said. “I’m sure we’ll have discussions with the developer regarding their lease potentials. Keeping in mind while in most cases, there are disappointments along the way, these projects don’t have a lot of risk for the city. In terms of long-term financial obligations, I really see the city’s positions as — I wouldn’t say good — but I don’t think there’s a challenge that we can’t get over.”
Merriam has granted tax increment financing for the project.
Cleveland-based Developers Diversified Realty Corp. (NYSE: DDR) is The Merriam Village Shopping Center’s developer.
Circuit City also said that it chose to close the stores “(d)ue in part to its deteriorating liquidity position and the continued weak macroeconomic environment” and that it “is considering all available options and alternatives to restructure its business.”
Stores slated for closing are in 55 U.S. markets. The Kansas City-area stores are among 12 markets the company said it will exit entirely.
The stores Circuit City will close had sales of about $1.4 billion in fiscal 2008.
jlamartina@bizjournals.com | 816-421-5900
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