Circuit City files for Chapter 11 bankruptcy
Just last week, the US' second largest CE retailer announced it will close 155 stores and lay off around 17% of its employees in further attempts to lower operating costs. This morning, the second shoe officially dropped.
Since last week's announcement, Circuit City has said that vendor concerns about its liquidity and ability to pay for its purchases have "escalated considerably."
Behind the scenes, the company has been reorganizing its support structure to fit with its new smaller base of 566 stores. This reorganization involved laying off 700 more employees on Friday from administrative and corporate-headquartered positions. These reductions brought the total layoffs to 20%.
Today, perhaps in light of the fact that the Christmas decorations are coming out at the chain's remaining stores, interim CEO James Marcum said, "We know there is never a good time for individuals to be impacted by decisions like these, and we deeply regret the effect this has on our associates. I want to thank them for their continued loyalty and dedicated effort as we go forward with the belief that implementing long-term and lasting change to our business will come by satisfying our customers, one at a time."
Existing stores will reportedly remain open during the holiday season on a $1.1 billion loan from the retailer's existing lenders.