In a bid to cope with the economic melt-down, Circuit City, the US electronics giant, may move forward with their decision of closing down 155 stores cutting about 17% of its US recruits, said a recent media release. In order to sustain profit, the firm is required to shut about 20% of its outlets spread across US, the report said. Presently Circuit City operates from more than 700 US outlets, and if the report is to be believed, 155 of them may face marching order before the year-end.

Best Buy, rival of the Circuit City, has shown special interest in acquiring the yet-to-be-closed stores of its competitor. Commenting on the recent development, Brian Dunn, chief operating officer of Best Buy said, “If store-fronts close, a big number, you can bet that we will jump in and connect with those customers … and take advantage”.

According to Circuit City, the stores under consideration for closing have fetched about $1.4 billion net sales during the fiscal 2008. The company said, “When results were viewed at the individual comparable store level, the closing stores, as compared to the stores remaining open, on average had lower net sales, a lower close rate and a lower gross profit margin rate. The stores, on average, were also unprofitable when marketing expenses were allocated to the individual store-level results”.

Philip Schoonover, Circuit City’s chairman and chief executive, has recently stepped down in September last, indicating a submerged financial condition of the company that is currently facing a stiff competition from it’s rival Best Buy. Besides shutting its stores and cutting workforces, Circuit City is also seriously planning for a major makeover to retain its customers.

At the backdrop of worsening liquidity situation and tighter credit circumstances from vendors, Circuit City said, “Due in part to its deteriorating liquidity position and the continued weak macroeconomic environment, the company has decided to take certain restructuring actions immediately, including closing 155 domestic segment stores, reducing future store openings and aggressively renegotiating certain leases”. The company also added, “While management is working diligently to secure the support of its vendors and believes it has maintained good relationships with these important partners, the current mix of terms and credit availability is becoming unmanageable for the company”.