Bankrupt Circuit City Stores Inc. said yesterday that it is going out of business and will shut down its 567 stores in the United States, including 15 in Maryland, after a plan to sell the company failed.
The country's second-largest consumer electronics chain employs more than 30,000 people who will now be out of work. A bankruptcy judge approved the company's liquidation plan yesterday, and sales could begin as soon as today.
The company's demise was just one of many layoff announcements yesterday from companies in various industries and highlighted how the weak economy is affecting different sectors. Almost 40,000 job cuts were outlined yesterday between Circuit City, Hertz rental cars, WellPoint health insurance and others.
Economists said it's a sign that the deterioration of the economy is far from over and a rebound is unlikely soon. National unemployment reached 7.2 percent last month, but labor experts predict those figures will climb as the year goes on.
"The month-to-month pace of this thing is frankly frightening as you see it," said Charles W. McMillion, president and chief economist at MBG Information Services in Washington. "Even expecting that it was coming, you always hope as it unfolds that it won't be as bad as you expect, and it is every bit as bad. Even despite the massive subsidies and federal efforts going on."
Most of the cuts yesterday were a result of weak consumer spending and previous job losses.
Rental car company Hertz Global Holdings Inc. said it would cut its work force by 4,000 jobs worldwide as it deals with curbed demand for travel and weaker vehicle values. It laid off 1,400 workers in the fall.
Insurer WellPoint Inc. said it will cut about 1,500 jobs, or 3.5 percent of its staff, with rising unemployment leading to fewer people with health insurance. And The Wall Street Journal reported that drug company Pfizer Inc. plans to lay off 2,400 of its 8,000 sales force, after announcing earlier this week that it would trim 800 scientists from its research and development division.
Chip maker Advanced Micro Devices Inc. said it will trim 1,100 jobs, or 9 percent of its workers, as computer sales continue to decline. And ConocoPhillips said falling crude oil prices are forcing it to cut its work force by 4 percent and cut capital spending by 18 percent. Oil prices hit above $147 a barrel in July but are now about $40 a barrel.
Falling costs for items like gasoline were reflected in a new government report released yesterday showing that consumer prices tumbled again in December. The figures highlighted that inflation last year logged its smallest advance since the early 1950s, fanning new fears that the country might face a dangerous bout of deflation.
Consumer prices dropped 0.7 percent in December, marking the third straight month prices fell. For all of 2008, prices inched up 0.1 percent, the smallest increase since 1954. Although prices spiked during some summer months - as oil hit record highs and food prices marched upward - the inflation threat of 2008 ended up fizzling.
That can be good for consumers, but a prolonged decline can drag down Americans' wages and clobber already stricken home and stock prices. Dropping prices are already hurting businesses' profits, forcing them to slice capital investment and lay off workers.
Other companies announcing job cuts yesterday include: Blue Cross Blue Shield of Michigan, Honda Motor Co. and scientific instrument maker Varian Inc.
And earlier this week, Saks Inc. said it is slashing 1,100 jobs, eliminating merit raises in 2009, suspending matching contributions to its 401(k) plan for at least one year and suspending benefit accruals for workers who remain in the company's pension plan.
Even Internet search leader Google Inc., which seemed impervious to the economy's troubles, said this week it will close three engineering offices and cut 100 recruiters.
Consumers fears about spending was at least part of the problem for Richmond, Va.-based Circuit City, which had been working with two companies to either buy it or provide additional financing so it could stay in business. The company filed for Chapter 11 bankruptcy protection in November.
"We are extremely disappointed by this outcome," James A. Marcum, the company's vice chairman and acting president and chief executive officer, said in a statement. "We were unable to reach an agreement with our creditors and lenders ... and so this is the only possible path for our company."
Circuit City is the latest retailer to fall amid slumping sales. Merchants are coming off their worst holiday season in four decades, and retail experts expect more store closings during the coming months.
Linens & Things, Mervyn's LLC, KB Toys and Tweeter have filed for bankruptcy during the past year, and many of those have liquidated their stores.
Circuit City was forced to declare bankruptcy after it faced difficulties in getting products from vendors to sell in its stores because it was having trouble paying its bills. The company said its holiday results would be crucial. As part of the November bankruptcy announcement, it closed 20 percent of its then-700 stores, including three in Maryland: the Golden Ring store on Pulaski Highway as well as stores in Beltsville and Marlow Heights.
The company has appointed Great American Group LLC, Hudson Capital Partners LLC, SB Capital Group LLC and Tiger Capital Group LLC as liquidators, it said in court documents.
The Associated Press contributed to this article.