Circuit City closing stores; 14 could go in Illinois

After months of speculation and struggling sales, Circuit City Inc. Monday said it would close 155 stores, including half of its locations in the Chicago area.

Company officials at the electronics retailer blamed a weak economy and deteriorating liquidity.

Still, local stores remained open to shoppers Monday. The stores will start discounting merchandise for clearance Wednesday and begin closing through the end of the year.

The Richmond, Va.-based company said 14 stores would close in the Chicago market: in Arlington Heights, Batavia, Bloomingdale, Bolingbrook, Calumet City, Countryside, Crystal Lake, Joliet, Kildeer, Niles, Oswego, South Barrington, Vernon Hills and the North Avenue store in Chicago.

"We believe Circuit City will close as many as 400 stores," said David Klein, senior vice president/financial consults for RBC Wealth Management in Vernon Hills. "From a consumer standpoint, credit is tight. And people are used to having equity and borrowing power. Now, the spigot for loans has been turned off."

Another 15 stores will stay open in the Chicago area, said Circuit City spokesman Jim Babb.

The company will lay off about 17 percent of its U.S. work force, which could affect up to 7,300 people. But the final number of layoffs could be lower. The company now has around 42,000 workers nationwide.

"No decision on severance has been made," Babb said. "But if there are open positions at other nearby stores, affected associates are certainly encouraged to apply for them."

Babb declined to say how many workers in the Chicago area would be affected. He said the stores that have closed or are closing have been underperforming or no longer fit the company's strategy.

The company will keep open about 700 stores in Canada and will continue to operate its Web sites, including CircuitCity.com and FireDog.com. They'll also leave at least a dozen markets, including Phoenix and Atlanta.

One unnamed employee at the Circuit City on Rand Road in Arlington Heights said his co-workers weren't notified exactly when the store would close but were told to prepare. That store opened in September 2007.

The Circuit City at the new Arboretum of South Barrington on Higgins Road is among those closing.

Arboretum developer Michael Jaffe of the Jaffe Cos. said he's not surprised; rumors of Circuit City's financial problems have led several businesses to inquire about the availability of the site.

Jaffe said his firm knew of the chain's struggles when they signed their lease more than a year ago and have contingency plans for a vacancy.

"Our spot is an ideal site," Jaffe said. "But it may take a while in this economic climate."

In Bloomingdale, the store on Army Trail Road remained open Monday, as it wasn't included on the list of pending closings. However the nearby outlet store at 152 S. Gary Ave., which was only open on weekends, had already served its last customer.

Shoppers who bought items from a closed store can visit an open store to make an exchange or return.

Circuit City has steadily lost money in recent years; the company reported a $321 million loss last fiscal year and a $239 million loss in the second quarter.

The company also claims it has been unable to collect an $80 million income tax refund that it believes it is owed from the federal government.

Local consumers Monday didn't spend much time mourning.

Chris Collar of Arlington Heights said he really can't tell much different between Circuit City and Best Buy, which has a store across the street on Rand Road.

"You still hate to see any business close," Collar said.

Meanwhile, even though Lynn Rose walked out of the same store after purchasing a new cell phone, she said she won't miss Circuit City. Occasionally a circular advertising a low price would lure her inside, but her visits were always brief.

"Once I get inside, I couldn't wait to leave," Rose said.

After its announcement on Monday, the stock jumped 10 cents, or about 38 percent, to close at 36 cents.

•Daily Herald staff writers Lee Filas and Jake Griffin contributed.

<div class="infoBox"> <h1>More Coverage</h1> <div class="infoBoxContent"> <div class="infoArea"> <ul class="morePdf"> <li><a href="/pdf/110308_store_closing_list.pdf">Complete store closing list</a></li> </ul> <h2>Related links</h2> <ul class="moreWeb"> <li><a href="http://newsroom.circuitcity.com/releasedetail.cfm?ReleaseID=344747">Circuit City's closings plan</a></li> </ul> </div> </div> </div>