Circuit City Stores, Inc. (NYSE: CC) announced today, Nov. 3, the immediate closure of 155 U.S. stores. The country's second-largest electronics retailer blamed the move on its "deteriorating liquidity position" and the "continued weak macroeconomic environment." Circuit City is also reducing future store opening plans and said it will put pressure on landlords by "aggressively renegotiating certain leases." Further, the retailer said it is considering "all available options and alternatives to restructure its business." Circuit City said the 155 stores being closed are all underperforming or are "no longer a strategic fit for the company" and generate $1.4 billion in annual net sales. As a result of the closures, the retailer will exit 12 U.S. markets. Follow this link for Circuit City's list of closed stores. States subject to the most store closures include Arizona, California, Georgia, Illinois, New York, Ohio and Florida. The stores will not be open on Nov. 4, but will reopen on Nov. 5 in liquidation mode; the sales will continue through the holiday season; but Circuit City said doors will shutter no later than Dec. 31, 2008. The store closures will result in a reduction of approximately 17% of Circuit City's U.S. workforce and will leave the retailer with 566 U.S. stores. While Circuit City established its go-forward "The City" 20,000-square-foot prototype store last year, the retailer's average existing store is about 34,000 square feet, according to CoStar Tenant. Therefore, this closure of 155 stores could translate into more than 5.2 million square feet of retail space being vacated. The retailer is canceling the opening of 10 stores that were scheduled to open this year and will only open two "incremental" stores during the remainder of this year. In addition, it will not open any new stores during 2009. Previously, Circuit City had targeted the opening of 38 to 45 new stores in 2008 (through second quarter it had opened 20 of them); it opened 43 new stores in 2007. More store closures are likely in the cards for the retailer, as a certain percentage of landlords are likely to reject Circuit City's attempts to renegotiate leases with the intention of "significantly lowering rents." The retailer said it might exit leases if rents aren't reduced. Circuit City plans to work with landlords to terminate leases for the stores being closed, as well as "leases for a number of inactive locations that were closed previously and for the locations that are no longer being opened." Circuit City cited the causes of its weakened liquidity position to include: sales and gross profit margins coming in below management's expectations; tightened restrictions on payment and credit terms enforced by vendors has become "unmanageable" for Circuit City; the suspended receipt of an $80 million tax refund the company believes it is owed; and the downgrade in value attributed to the company's inventory based on a recent third-party appraisal. A reduction in inventory value could mean the company's liquidation sales at closed stores may bring in less than the $350 million it was anticipating to generate. In early October, Circuit City reportedly hired Skadden, Arps, Slate, Meagher & Flom LLP as bankruptcy counsel - the firm is the same one that advised Kmart in its Chapter 11 reorganization. In addition, Circuit City has appointed FTI Consulting to create a turnaround plan and Rothschild Inc. to handle negotiations with banks in an effort to line up debtor-in-possession financing. In other bad news, the New York Stock Exchange (NYSE) notified Circuit City that is in danger of being de-listed; because the company's common stock has traded for less than $1.00 per share over a consecutive 30-day trading period as of Oct. 22, 2008. According to Yahoo Finance, the retailer's closing stock price the last trading day before this announcement was $0.26, down from a 52-week high of $8.24. In early July, Blockbuster Inc. (NYSE: BBI) pulled its offer to acquire Circuit City for at least $6.00 per share in cash. In its most recent quarterly report, which included a 14.4% decline in comparable store sales at U.S. stores, Bruce H. Besanko, executive vice president and chief financial officer of Circuit City said, "We continue to face challenges in our sales performance...driven by a significant decline in traffic, which we believe reflects the worsened macroeconomic environment, competitive pressures and a weakened brand position. While we have continued to gain traction in key areas...the progress we have made to date has not been sufficient to reverse our overall business results." According to Circuit City's most recent quarterly SEC filing, the retailer had already accrued $115.7 million in lease termination costs through Aug. 31, 2008, which consists of 98 already-vacated locations, only 37 of which Circuit City has successfully subleased. According to the company's most recent annual SEC filing, 71 of the retailer's store leases expire by the end of 2013, 338 expire between 2014 and 2018, at least 279 expire between 2019 and 2025.