GO
Loading...

Enter multiple symbols separated by commas

Circuit City Shares Higher On Restructuring Plans

Circuit City Storessaid 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.

The news sent shares up about 3% in morning trading.

Circuit City, the nation's No. 2 consumer electronics retailer behind Best Buy said 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," Circuit City CEO Philip J. Schoonover said in a statement.

The Richmond-based company also plans to outsource its information-technology infrastructure operations to International Business Machines , a move that is expected to cut IT expenses by more than 16%. 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.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Lottery ticket

    A thief who broke into the car of a Seattle couple left behind a million-dollar lottery ticket, NBC News reports.

  • The Lamborghini SpA Urus SUV.

    There's no shortage of luxury vehicle choices, but increasingly the wealthy are opting for high-end SUVs instead of traditional models.

  • Mike Trout #27 of the Los Angeles Angels takes a picture with fans before a game with Boston Red Sox at Fenway Park on May 23, 2015 in Boston, Massachusetts.

    MLB is using digital media initiatives like Snapchat and Web video to connect with younger viewers. Is it enough?

U.S. Video

  • Cramer: Here's the no. 1 play in cybersecurity

    Guarding Your Portfolio? "Mad Money" host Jim Cramer's got the number one pick for protection services in today's digital world.

  • Underestimate Cisco at own peril: Cramer

    Mad Money's Jim Cramer takes a look at the cybersecurity space to see if it could also protect your money.

  • Fly with LUV?

    While remaining profitable, Gary Kelly, Southwest Airlines chairman and CEO, tells Mad Money's Jim Cramer the company continues to focus on being a great airline and offering great customer service.