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Circuit City to Close 19 Superstores, Four in Ohio"
RICHMOND, Va. -- Just days after officials announced they are considering an offer to purchase the company, Circuit City Stores Inc. announced the closing of 19 superstores -- four in Ohio -- plus five regional offices and one distribution center. The company also has sold a corporate building as part of ongoing intiatives designed to imiprove financial performance.The Ohio stores slated for closing by the end of this month include Westland in Columbus, North Olmsted, North Randall and Parma. Locally, Circuit City operates stores in Boardman and Niles.Earlier this week, Circuit City announced receipt of an unsolicited letter from Highfields Capital Management LP indicating Highfields' interest in pursuing an acquisition of all of Circuit City's outstanding shares at a price of $17 in cash per share. Circuit City directors will evaluate the proposal."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 over the near term," said W. Alan McCollough, chairman and chief executive officer. "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. The repositioning of our stores within these markets continues, and it no longer makes financial sense to keep some of the stores in those markets open."In the fourth quarter of the current fiscal year, Circuit City expects to incur expenses of approximately $30 million after tax in conjunction with the store and regional office closings. The costs relate primarily to lease terminations, fixed asset disposals and, to a lesser extent, severance and other costs. The 19 stores combined had revenues of $170 million for the 12- month period ended Dec. 31, 2004.In addition to the store closings, the company will close a distribution center located in Doswell, Va. The 400,000-square-foot facility will close at the end of the month. After a transition period, the company expects a reduction in inventory as the company shifts store replenishment distribution to its other nine distribution centers.The company also sold one of the buildings at its corporate headquarters campus to Perimeter Center LLC., an affiliate of Daniel Realty. The 188,120-square-foot building, known as Deep Run II, opened in July 1994. The transaction resulted in a gain of approximately $1.8 million after tax, and the elimination of $12.6 million of long-term debt associated with the operating lease arrangement from the company's consolidated balance sheet.Visit Circuit City Stores Inc.: www.circuitcity.com"