We called it: Circuit City is closing 155 stores, not even waiting to see if holiday sales have a chance of propping up the 700-store chain. This is a very bad sign; I’d look to see if Circuit City is one of the titans to fall in January. Consumerist has the complete list of stores to close. The cuts are heavy in Georgia, Arizona, California, Illinois, and Ohio, and they’re scooting out of some markets entirely. Surprisingly, the Northeast is largely spared with only one store in New England to shut and relatively few in the New York City metropolitan area.
The company has posted six straight quarters of falling sales. Circuit City hired FTI Consulting Inc. and replaced its chief executive officer in September after losing customers to Best Buy Co. and Wal-Mart Stores Inc. Circuit City is closing stores in 55 metro areas and will exit 12 of those markets altogether, including Atlanta, Phoenix and Kansas City, Kansas.
Circuit City is closing stores that contributed $1.4 billion in revenue last year, an average of about $9 million per store. Average revenue per U.S. store last year was about $16 million. The retailer, founded in 1949, has struggled with older stores in less desirable locations.
“Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply,” CEO James Marcum said in the statement. “The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors.”
Circuit City tried to sell itself in May after Blockbuster Inc. made a preliminary offer that was later withdrawn. It fired higher-paid workers and opened smaller stores to cut costs. Until the shift to smaller stores, Circuit City’s strategy had been to sell in locations as large as 44,000 square feet.
In the meantime, we missed the story last week but the long-beleaguered Value City department store chain will be closing all of their remaining locations. Frankly, this one seems overdue; Value City’s dowdy, confusing fleet of stores always felt like a relic from the ’70s, and they long ago lost any specific value proposition. Frankly VC has been a weaker player than even Kmart (or even the more-comparable Mervyn’s) for a long time. Economic downturns like this one tend to clear out the deadwood first, and it’s hard to define Value City as much else.
Interestingly, Value City’s closing will have a heavy impact on some marginal shopping malls. The Shore Mall near Atlantic City is one that comes to mind, as does the Fairlane Village Mall in Pottsville, Pennsylvania: the center is anchored by only Value City and Boscov’s, two troubled chains.