Job Cuts for Circuit City

CNNMoney.com reports on layoffs at Circuit City.

Circuit City (NYSE:CC) Stores Inc. said Wednesday it plans to cut costs by laying off about 3,400 store workers and hiring lower-paid employees to replace them, and by trimming about 130 corporate jobs.

Its shares rose 3 percent in morning trading.

Circuit City, the nation's No. 2 consumer electronics retailer behind Best Buy Co. Inc. (NYSE:BBY) , the store workers being laid off were earning 'well above the market-based salary range for their role.' They will be replaced with employees who will be paid at the current market range, the company said in a news release.

'We are taking a number of aggressive actions to improve our cost and expense structure, which will better position us for improved and sustainable returns in today's marketplace,' Philip J. Schoonover, Circuit City's chief executive, said in a statement.

The Richmond-based company also plans to outsource its information-technology infrastructure operations to International Business Machines Corp. (NYSE:IBM) , a move that is expected to cut IT expenses by more than 16 percent. About 50 of Circuit City's IT workers will move to jobs with IBM and remain on the Circuit City contract. The other 80 corporate positions will be cut.