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Circuit City's North Star
Circuit City to eliminate another 850 jobs

In late March, DailyTech reported that Circuit City fired 3,400 employees in an effort to trim costs. The jobs cuts represented eight percent of Circuit City's overall workforce and came just a month after the company's announcement to close nearly 70 stores in North America.

"These actions represent the execution phase of the work initiated this winter to accelerate Circuit City's transformation," said Circuit City president, chairman and CEO Philip J. Schoonover in March. "Unfortunately, a number of Associates are directly impacted by the actions, but we are making Circuit City stronger for the long term."

It now appears that the March firings were just the beginning. Circuit City is gearing up for another round of layoffs to build on its four pillars for success:  to win in home entertainment, grow its services business, leverage the shift to multichannel retailing, and significantly improve its real estate position. The pillars are a part of Circuit City's 5-year plan to restructure the company and expand its reach into more profitable sectors of the technology market.

This time around, the company axed roughly one manager from each of its 654 stores along with nearly 200 positions at its Richmond, VA headquarters.

Despite the 850 jobs cuts, Circuit City has plans to open 165 new stores.

Online forums have been abuzz since yesterday about the impending job cuts. Many who were fired have even expressed disdain for Circuit City’s “North Star” concepts which are supposed to help and guide employees:

  • Engage - Excite And Inspire Me
  • Respect - Treat Me Like I Matter
  • Teach - Guide And Support Me
  • Simplify - Make It Easy For Me

In today's increasingly more cut-throat marketplace, it appears that the "Respect" aspect of Circuit City's North Star initiative shouldn't be taken too literally.

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great plan
By MrBungle123 on 5/31/2007 12:18:21 PM , Rating: 2
Instead of kicking thousands of people to the curb, they could have cut the CEO who obviously wasn't doing his job if the company needs to "trim costs", that usually means "people aren't buying our stuff". Since the CEO failed to steer the company in the right direction, now the company is having financial problems, and the CEO keeps their (probably) multi-million dollar salary and 3400 people are out of work... Typical




RE: great plan
By BMFPitt on 5/31/2007 12:39:40 PM , Rating: 2
Maybe it was cheaper to keep him than to give him a $25 million golden parachute.


RE: great plan
By techfuzz on 5/31/2007 2:13:47 PM , Rating: 2
A $25 million golden parachute isn't worth anything if the company files for bankruptcy! If it's the CEO that's at fault, and it sounds like it is, then it's better to fire them now and bring in someone new. The situation isn't going to get any better by letting the current CEO try to fix a company they obviously couldn't keep from failing in the first place.


RE: great plan
By Christopher1 on 5/31/2007 3:44:58 PM , Rating: 2
I have to agree with those statements. It is about time that Circuit City realized that the REAL problem they are having is that their upper-management are idiots!
They are simply not doing the things that would bring Circuit City back to being a dominant player like they were 15 years ago.


RE: great plan
By othercents on 5/31/2007 3:47:33 PM , Rating: 2
So your saying they could have trimmed costs, kept all the stores open, and all the employees if they fired the CEO and hired a new one? I think the reality of all this is no matter who the CEO is they would have still fired employees and closed unprofitable stores to trim costs. At least this way they don't have to pay the CEO to leave.

Other


RE: great plan
By retrospooty on 5/31/2007 4:44:49 PM , Rating: 2
I think what is being said is that the CEO and upper management didn't do a good job at all of keeping Circuit City profitable, and competitive (it could be product placement, special promotions, advertising etc) so Circuit City has been downward spiraling for many years. Now that the $hit hit the fan, the CEO is off scott free and thousands of employees are laid off.


RE: great plan
By Chaser on 5/31/2007 12:40:01 PM , Rating: 5
Thats always a convenient argument. But a captainless ship will go nowhere and eventually sink. Although the existing CEO could have been the cause of C.C.'s present woes (although I think competition from Best Buy and other chains is probably more to blame) they'd still have to hire a new qualified CEO that I doubt would work for charity.


RE: great plan
By TomZ on 5/31/2007 12:57:27 PM , Rating: 2
I'm sure the OP was not suggesting that the CEO be fired and not be replaced, LOL.


RE: great plan
By MrBungle123 on 5/31/2007 1:52:18 PM , Rating: 3
if the CEO doesn't have the forsight to realize that the company will have competition, and a can't adjust the companies strategy to meet the needs of the constantly changing business environment so that they remain profitable and growing what good are they?


RE: great plan
By Sleazell on 5/31/2007 8:47:59 PM , Rating: 2
I think you are correct. I worked for CC from 1998 to 2002 ( I was laid off from their first cut...didn't hurt me to much as I was in college). I remember in 2001 they held this store meeting to "make strategic changes". It was the beginning of us moving away from being knowledgeable about products and good customer services and becoming more like Best Buy. In fact that next year is when they cut all the people who were making a good salary from commission and went to hourly. I talked to my friends that managed to stick around and they said the store was doing terrible. A lot of the high rollers sales guys had built relationships with customers and without that Circuit City had nothing. Why pay more, when given crappy advice from someone you don't trust? If it didn’t work the first time cutting staff back why is it going to work this time? The point I am making is in competition there is #1 and #2. Sometimes you just have to except you are #2 and do that well (i.e. Target). At one point I think CC had a business model that worked but got greedy, didn’t want to pay their employees well and are now feeling the backlash. Management totally messed up what they had.


RE: great plan
By RjBass on 5/31/2007 2:27:04 PM , Rating: 3
I'm just making a wild guess here as I really don't know one way or the other, but maybe it wasn't the CEO's fault. Maybe it has more to do with our economy not being as good as some politicians would have us believe.


RE: great plan
By hubajube on 5/31/2007 3:24:29 PM , Rating: 1
quote:
Maybe it has more to do with our economy not being as good as some politicians would have us believe.
Which politicians are those? I only see the "sky is falling" politicians preaching doom and gloom while the Dow is in record territory. All the while i make more money off of this "shitty" economy. Where's my "rolls eyes" avatar?


RE: great plan
By Spivonious on 5/31/2007 3:41:02 PM , Rating: 2
All I know is that the value of the dollar is falling through the floor. Heck, we're almost even with the Canadian dollar now!


RE: great plan
By encryptkeeper on 5/31/2007 6:01:27 PM , Rating: 2
Which politicians are those? I only see the "sky is falling" politicians preaching doom and gloom while the Dow is in record territory. All the while i make more money off of this "shitty" economy.

Didn't pay much attention in econ class did we? The Dow Jones is in record territory yes, but it's also not a Cliff's Notes guide to the economy. In short, economic growth of the entire US published every quarter is a much better way to gauge the entire economy as a whole. For instance, the GDP for the first three months of this year grew at .6% (and it was projected to grow at 1.3% for that timeframe). Overall, we're experiencing the slowest economic growth since '02. The Dow Jones is just a report of companies in the stock market, and to keep it very basic, it's not a full report of the economy because not nearly all US business trade stocks through the stock market and are therefore not counted. People mainly buy stocks either to sell them at a higher price and make money, receive dividends from their stocks, or to have controlling interest in the company.

At the same time, inflation is hurting the economy as well. Think about how much more you could buy ten years ago with 10 dollars. Now it's not quite so much. Sure there's more money floating around, but it's not worth as much.

According to msnbc.com, the main reason behind the almost negative growth was due to the trade deficit being much larger than was originally thought (other than that, I don't know or understand the trade deficit). Also, companies didn't keep as much stock on hand for supplies or sales to customers.

If you're making money in the stock market right now, and doing it consistently, congratulations as few people can do that. At the same time, your analysis of the economy being great were totally off base and quite frankly, uninformed. Please make sure to alleviate this for future posts, because when you scan through our humble www.dailytech.com, you'll find we pride ourselves on always making sure our posts are from well informed people.


RE: great plan
By TomZ on 5/31/2007 7:43:42 PM , Rating: 2
One thing you can say about the stock market relative to the overall economy is that the a rising (or falling) stock market tends to be a leading indicator of near-future economic growth (or lack thereof). So there is some correlaton, though not perfect.


RE: great plan
By Roy2001 on 5/31/2007 4:44:28 PM , Rating: 2
He makes as much as Intel CEO makes. What a shame.


RE: great plan
By mamabear on 6/1/2007 11:19:06 AM , Rating: 2
FYI: My son and 5 other "lead" employees of Circuit City in Newhall, CA were laid off yesterday as part of the Circuit City restructuring. May have been other employees laid-off too.


By OxBow on 5/31/2007 12:43:39 PM , Rating: 2
This reminds me of a poster from Despair.com

"Sometimes the solution to moral problems is to fire all the unhappy people."

The quickest way to reduce costs and make the annual report look good is to fire people. This makes the accounting sheets look better, so the stock ticks up. The execs cash in their back dated stock options or exercise a little insider trading and retire to Bermuda. Such tactics did wonders for the US auto industry, made it what it is today. I'm glad to see that some tech related companies are following in this grand tradition.




By TomZ on 5/31/2007 12:56:08 PM , Rating: 2
moral -> morale.

Regarding the auto industry - the problem with the domestic auto industry is exactly the opposite. Because of the unions, the auto industry is unable to adjust their production labor costs as demand fluctuates. Instead, when demand decreases, they have to continue to pay everyone's salaries and rack up enormous costs. There is no such "quick fix" that I've ever seen executed in the auto industry through layoffs, at least in the past 20 years that I've been aware of the industry.

I'm not saying the problem with the auto industry is not entirely out of its control, but the holdover of the unions from the olden days when domestic automakers had monopoly pricing power are actually quite difficult to cope with.


By FITCamaro on 5/31/2007 1:21:52 PM , Rating: 2
Exactly on the auto industry. Unions ruined it. And they continue to try and do so. When you have uneducated people who build the cars and can't be fired because of a union contract making more money than the engineers that design the cars, thats a problem. There are US auto industry workers who do practically nothing making $25-35 an hour. Thats $52,000-$72800 a year which is a level I or II engineering salary. It's jobs like those that are the reason many kids today don't get an education. They see people making that much with no education and say "Why go to college" not realizing that those jobs are disappearing.

And the worst part is, a lot of that money goes to the union for "protecting their jobs". If the union wasn't there, their job wouldn't require as much protection. The workers actual salaries would be less but they'd still take home about the same and GM, Ford, etc. could afford to pay more of them.


By Christopher1 on 5/31/2007 3:51:22 PM , Rating: 1
Wrong. Unions did NOT ruin that industry, what ruined the American auto industry was making sub-standard cars for a long period of time, to the point where no one with a brain would buy a car from them anymore. My mother bought a Chevy Eagle and had NOTHING but problem with it 18 years ago, until she got rid of it 9 years ago.

It was a money-dump, it had problems with the engine that they could not seem to fix and was in the shop about every 3 weeks with a price tag of $600 dollars each time to fix for nearly 5 years and they NEVER fixed it correctly.

My father finally got tired of it, and we got rid of the Eagle and they bought a new Chevy SUV from a dealer who my father was friends with near our home and trusted.