Big Box Watch: Circuit City Lays Off 3,400 Store Associates, Plans to Replace Them with Lower-Paid Employees
Circuit City laid off approximately 3,400 store associates as part of “a series of changes to improve financial performance largely by realigning its cost and expense structure,” said the company.
That doesn’t necessarily mean Circuit City will be short-staffed, however. The laid-off associates, said the CE retail giant, will be replaced with new associates who earn less. It said the staffing cuts focused on associates who were paid “well above the market-based salary range for their role,” and that new associates will replace them “at the current market range for the job.”
However, it could mean that a glut of experienced electronics salespeople and other personnel could be suddenly available in your market. Whether they have the relevant experience and knowledge to work in a custom shop is another matter.
Circuit City also outsourced its IT operations to IBM, resulting in approximately the termination of 130 employees at the corporate level, 50 of whom will be picked up as on-site representatives by IBM.
Due to these and variety of other back-office and organizational changes, Circuit City revised its fiscal 2007 outlook slightly downward. It now expects 8 percent consolidated net sales growth and comparable store sales growth of 6 percent.
Circuit City stressed that its key strategic initiatives going forward are “digital home services, multi-channel and home entertainment.”
Circuit City’s layoffs and wage adjustments come on the heels of Tweeter’s massive set of store closings and job cuts earlier in the month. Best Buy, meanwhile, continues to grow.
Circuit City operates 643 superstores and 12 other locations in 158 U.S. markets.