Circuit City replacing 3,400 employees who earn too much

Circuit City Stores Inc. cut 3,400 sales employees and plans to replace them with newly hired employees who will earn lower, “current market” wages.

The move, announced yesterday, is part of a number of actions the electronics retailer is taking to cut costs to stay viable in a marketplace where more cost-efficient retailers have begun selling items, such as flat-screen televisions, that Circuit City specializes in.

Employees who lost their jobs yesterday “were paid well above the market-based salary range for their role,” Circuit City said in announcing the cuts.

Circuit City employs about 50 full- and part-time associates at each location, “including sales support personnel, such as customer service associates, product specialists and stockpersons; three sales managers; an operations manager; and a store director,” according to a regulatory filing.

The company operates more than 650 retail outlets in the United States, including four lower Hudson Valley locations in White Plains, Yonkers, West Nyack and Cortlandt, where 13 workers were fired, according to Circuit City spokesman Bill Cimino.

In the seven-county Hudson Valley region, retail salespeople earn a median salary of $21,450 a year. But Cimino said the criteria Circuit City used for determining the cuts also looked at wages for similar jobs within the market.

Cimino said that if any of those workers wanted to reapply for those jobs at the new lower wage they would be eligible to do so, “but after a period of time.” Employees have been given severance and wouldn’t be eligible to reapply for about two months, he said. The severance amounts were dependent upon several factors including length of time employed, Cimino said.

In addition to the 3,400 sales employees, Circuit City said it eliminated 130 corporate associates, 50 of whom will transition to jobs at IBM Corp. but will remain on-site. The job reassignments are part of a $775 million pact that Circuit City estimates will trim more than 16 percent from its costs during the length of the seven-year contract.

Complete text linked below:

Source:
Circuit City replacing 3,400 employees who earn too much
Lower Hudson Online