Circuit City fires best workers; TV sales suffer

May 7, 2007

Circuit City, after firing 3400 of its highest-paid retail store sales employees in March, is now paying the price with lower sales.

“The Washington Post” reported last week that the retailer is expected to post a first-quarter loss next month and analysts are blaming the job cuts for the poor performance.

The company justified the firings by saying it needed to hire cheaper workers to improve its bottom line. Last week, the retailer revised and lowered its outlook for the first half of its fiscal year ending Feb. 29, 2008, citing poor sales of large flat-panel and projection televisions.

Analysts told the “Post” that Circuit City had cast off some of its most experienced and successful people and was losing business to competitors who have better-trained employees. “They were replaced with less knowledgeable associates,” said Tim Allen, an analyst with Jefferies & Co.

Digital and projection TVs are “intensive sales” requiring more informed employees, Allen said.

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