Circuit City Stores Inc. cut retail management positions and eliminated about 200 jobs at its corporate offices Thursday as it began another phase of its restructuring plan.
Circuit City, the nation's No. 2 consumer electronics retailer behind Best Buy Co. Inc., said it will eliminate an average of one manager for each of Circuit City's 654 U.S. stores and give more supervisory duties to midlevel sales staff. The changes will be based on store volume, the company said.
There are 3,000 people employed at the chain's corporate offices in Richmond and company officials didn't specify which 200 positions would be cut.
Chief Executive Philip J. Schoonover said that the job cuts are part of the middle phase of Circuit City's plan to reduce costs and improve financial performance in light of heavy competition from Best Buy and retailers like Wal-Mart Stores Inc., which have depressed prices for flat-panel televisions and other key products.
"We're in the second act of a three-act play," Schoonover said in a telephone interview with The Associated Press.
The company needs is "making some tough decisions on some things that we won't do anymore," said Schoonover, who has been Circuit City's chief executive since March 2006.
Thursday's in-store job cuts are part of a previously announced $110 million cost-savings plan; the corporate office reductions are projected to save an additional $15 million to $20 million annually, the company said.
Circuit City plans to add jobs when it opens 165 new stores over the next two years and tries to boost online sales. It also plans to enhance its Firedog home-installation and computer-services unit.
The latest changes come two months after the company laid off 3,400 store employees, replacing them with lower-paid workers, and trimmed about 130 corporate information-technology jobs by outsourcing the work to IBM.
Schoonover, a former Best Buy executive who started at Circuit City in 2004 as chief merchandising officer, addressed concerns that Circuit City's restructuring might be tackling too much too quickly.
"I think this is a hypercompetitive industry," Schoonover said. "We have a history of resilient behavior. Because of the changes to the profit model in our business we have to make these changes."
Circuit City is "acting with a sense of urgency" to benefit its customers, employees and investors, he said.
Scot Ciccarelli, an analyst with RBC Capital Markets, said in a research report that Circuit City "continues to reduce its cost structure to cope with a tough environment, but these cuts may further degrade the company's market share."
The company lost $11.8 million, or 7 cents a share, for the fiscal year ended Feb. 28. That's compared to a profit of $139.7 million, or 77 cents a share, in the previous fiscal year. Annual sales rose 8 percent to $12.4 billion, but fourth-quarter sales — which included the important holiday shopping season — only rose 1.2 percent.
Circuit City has said it expects to lose $80 million to $90 million from continuing operations in 2008's first fiscal quarter, based on lower than anticipated sales of flat-panel and projection TVs in April. The company said it plans to report first-quarter results June 20.