Circuit City to close 20% of stores, layoff thousands

Electronic retailer Circuit City plans to shutter 20 percent of its U.S. stores by December 31 and evaluate other cost reduction initiatives, it announced today, citing waning consumer confidence and the struggling financial markets.

The move will close about 155 of its 700 stores, and result in layoffs of about 17 percent of its workforce. It will also reduce future store openings and renegotiate some leases.

“The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors. The combination of these trends has strained severely our working capital and liquidity, and so we are making a number of difficult, but necessary, decisions to address the company's financial situation as quickly as possible,” said James A. Marcum, vice chairman and acting president and CEO.

And the company isn't wasting any time with the closures. Affected stores will not open on Tuesday, and will reopen the following day with closing sales that are expected to be completed by the end of the year.