Circuit City's Job Cuts Backfiring, Analysts Say

wahington post ^ | 5-2-07 | Amy Joyce

[Hydroshock]

Circuit City fired 3,400 of its highest-paid store employees in March, saying it needed to hire cheaper workers to shore up its bottom line. Now, the Richmond electronics retailer says it expects to post a first-quarter loss next month, and analysts are blaming the job cuts.

The company, which on Monday also revised its outlook for the first half of its fiscal year ending Feb. 29, 2008, cited poor sales of large flat-panel and projection televisions. Analysts said Circuit City had cast off some of its most experienced and successful people and was losing business to competitors who have better-trained employees.

Circuit City expects to report a loss for the first quarter because of poor sales of expensive televisions, which often require experienced salespeople. (By Steve Helber -- Associated Press)

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"I think even though sales were soft in March, this is clearly why April sales were worse. They were replaced with less knowledgeable associates," said Tim Allen, an analyst with Jefferies & Co.

In particular, the televisions showing disappointing results are "intensive sales" requiring more informed employees, Allen said. "It's a big-ticket purchase for somebody. And if they feel like they're not getting the right advice or are being misled by someone who doesn't know, it would be definitely frustrating. They will take their business elsewhere."

Circuit City said in March that sales would be volatile for the next several months as the company adjusts to the changes. But yesterday the company said it was too early to tell whether the dismissals had caused any of the falloff in April sales b

[1rudeboy]

Once again, bean counters making decisions that are contrary to good business practices common sense.

After spending a good deal of time in the corporate world, I came to the conclusion if the typical accounting grad student spent more time gettin' some lovin', or at least getting drinks, then none of this would ever happen.

[FreePaul]

...you get what you pay for.

One advertiser on a local radio station modifies that to "You get what you pay for, if you're lucky." Probably words such as cautious, careful, etc. could be substituted for lucky.

[P-Marlowe]

Circuit City fired 3,400 of its highest-paid store employees in March...

Who in their right mind would want to work for such a company? And if you did work for such a company why would you try to do a good job? If you do a good job you get a raise. If you get a raise, you get fired.

[Ghost of Philip Marlowe]

Serves them right for being greedy.

[durasell]

Gee, this is a tough one. Could the retail business possibly have something to do with the quality of customer service?

Note to whatever CEO might be reading this: Your most valuable assets walk out the door at 5:00 pm, then place themselves in a steel and glass box with a controlled explosion in front of them and highly flammable liquid behind them in order to hurtle down the street at 60 mph.

[HaveHadEnough]

I went in last month fully intending to walk out with a big screen plasma TV, and after a half hour of no one speaking to me, I walked back out empty-handed.

I was in a Best Buy just last Sunday looking for a computer. I asked one "kid" (all the sales people looked like they were under 23) for help, and he told me I would have to go over to the other counter (he remained standing, doing nothing, by the software). I went to the counter and waited 20 minutes. Nothing. I walked out. I'm going to buy the computer on-line.

[Moonman62]

Not unlikke replacing American workers with lower paid illegals.

[Tolsti]

“you do a good job you get a raise. If you get a raise, you get fired.”

That happens at a lot of companies, like some weird version of the Peter principle. It really does pay do be very average often. Places looking to reduce costs will often look at who makes the most and and start the cutting there. It sucks.

[Aquinasfan]

Once again, bean counters making decisions that are contrary to good business practices.

Yup. See it often at work. Apple seems to be the only company that escapes this trap.

[Red Badger]

The price of things may go up over time, but the value does not. In George Washington’s time, a gold coin, about an ounce, would buy you a nice tailored suit of clothes. Today, an ounce of gold is around $675 an ounce, or about the price of a nice tailored suit of clothes............

[pleikumud]

CC started going downhill a few years ago, when they eliminated washers, dryers and refrigerators from their stores. These common items increased traffic, even though they were low margin. Now everything is low margin, I think.

[tkathy]

Whoever was behind the dumbest corporate move I’ve heard of in a long time, should be named and held up for riducule.

[Aquinasfan]

There wasn’t a boxed item on the shelf. I looked all over the store and couldn’t find an employee to help me. As I was leaving a young woman standing at the door asked if I found what I wanted. I told her that I was leaving because I couldn’t find help. I don’t know if this is typical but in this case CC lost a sale.

Same thing happened to me at BJs. An unskilled salesperson would be a step up from no salespersons.

[Red Badger]

Places looking to reduce costs will often look at who makes the most and and start the cutting there. It sucks.

It sure does..........Happened to me once.........Worked for a place 10 years, worked my way up to a mid level management position, company got in financial straights (ie, they weren't selling anything), and so they "let go" of all their highest paid workers. And of course, we were the ones that had been there the longest, some 20 years or more..............The company did not last long after that, they were bought out......

[muawiyah]

Apple has already completely destroyed itself. Back when computer parts/technology first became amenable to mail order sales, Apple opted out of that opportunity by canceling all of its dealers who sold anything by mail.

The consequence was the total destruction of their dealership network and the loss of all of their knowledgeable people in the sales force.

They've subsequently accepted bribes/donations from Microsoft and others just to keep the Apple logo on the market.

Circuit City would have been well advised to see what happened to Apple shortly after their remarkably stupid mail order decision.

[YellowRoseofTx]

I went in last month fully intending to walk out with a big screen plasma TV, and after a half hour of no one speaking to me, I walked back out empty-handed.

You probably wouldn't have walked out with a plasma TV if some one HAD waited on you. When we were shopping for our plasma, we went to CC. We were waited on by a very competent and knowledgable young man who knew his stuff. We decided on the TV we wanted and were told it would be at least two weeks for them to get one in from the warehouse. We walked out and went to Sams where we got the one we wanted for less money and took it home the same day.

[listenhillary]

Must be that “just in time” inventory management I keep hearing about.

[Salamander]

Try the CC in Winchester VA.
It’s populated [almost] entirely by Goth-types and other kids with flourescent hair.

They will literally take you by the hand and lead you to whatever you’re looking for, often with several others tagging along, just in case.

[Hydroshock]

Yep, once agin US business looks only to the next quarter.

[Publius Valerius]

Circuit City couldn’t compete with Lowes and Home Depot in selling that type of stuff. You only have a limited amount of space in your store; why take up a significant amount of space with a product that you can’t move?

I never liked Circuit City because lots of the products have the old-fashioned checkout, where it has to be pulled from the back of the store. Annoying. Anyway, it seems like all these electronics store—other than Best Buy—are on their way out, anyhow.

Circuit City needed to take drastic steps to stay in business, so it took a big gamble. I guess it didn’t pay off, but I can’t blame them for trying. That’s the way it goes.