Circuit City exploring options including cutting workforce

Circuit City Stores has said that they have taken the services of Goldman Sachs to explore strategic options for a possible unit sale.

The company is also cutting costs by replacing 3,400 store employees with lower-paid workers. The news helped the company at the stock market as the share prices of Circuit City improved.

Circuit City is struggling in the market as it faces tremendous competition from rivals including Best Buy. They are considering selling off InterTAN Inc. division which they had acquired in 2004.

Bernstein analyst Colin McGranahan spoke about Circuit City: “While we view these cost cuts as clearly good for near-term earnings, they are not necessarily the way to drive longer-term operational success. It stands to reason that firing 3,400 of arguably the most successful sales people in the company could prove terrible for morale.”

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