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Circuit City to Close 19 Stores

RICHMOND, VA-The cost-cutting move will close stores mostly in the Midwest.

By Dees Stribling | Updated on February 16, 2005

RICHMOND, VA-Circuit City Stores Inc, which is currently mulling (or preparing to fight) a $3.75 billion takeover bid by hedge fund Highfields Capital Management, took action Tuesday to trim its costs by unveiling plans to close 19 stores by the end of this month, along with five regional offices and one distribution center. The majority of the store closures will be in the Midwest—Illinois, Indiana, Michigan, Ohio and Wisconsin—though there will also be two in Texas and one each in Tennessee and Virginia.

The company expects the store and regional office closures to cost it about $30 million, mainly because of lease terminations and fixed-asset disposals. The stores combined had revenues of $170 million for the 12-month period ended December 31, 2004.

“Based on our continuing analysis of markets across the country, we have identified 19 superstores located in trade areas that we believe can no longer support a Circuit City superstore, leaving the locations with no reasonable expectation of positive cash flow and without relocation opportunities,” says W. Alan McCollough, chairman and CEO of Circuit City. “In many of the larger markets in which we are closing stores, we have added incremental stores in more vital trade areas, or relocated stores to more attractive sites.”

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