Circuit City to Fire 3,400, Hire Less Costly Workers
Submitted by intexile on Thu, 03/29/2007 - 7:31pm.
By Mark Clothier
March 28 (Bloomberg) -- Circuit City Stores Inc., the second-largest U.S. electronics retailer after Best Buy Co., fired 3,400 of its highest-paid hourly workers and will hire replacements willing to work for less.
The company said its eliminating jobs that paid "well above" market rates. Those who were fired can apply for the lower pay, company spokesman Bill Cimino said today. He declined to give the wages of the fired workers or the new hires.
Circuit City, based in Richmond, Virginia, also hired Goldman, Sachs & Co. to study a sale of its 900 Canadian stores.
The moves will reduce 2008 expenses by $110 million and trim $140 million in annual spending in 2009. Sales may be volatile during the first half of this fiscal year as new sales people learn their jobs, the company said today in a statement.
"Firing 3,400 of arguably the most successful sales people in the company could prove terrible for morale," Colin McGranahan, an analyst with Sanford Bernstein & Co., wrote in a note today. "The question remains as to whether Circuit City can rebuild in time for the all-important holiday season."
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