Circuit City Stores Inc. fired 3,400 of its highest-paid hourly salespeople Wednesday morning, including 38 in the Denver market, and plans to replace them with lower-paid workers.

The biggest cuts in Colorado came at a Westminster store where nine staffers were fired, said spokesman Jim Babb.

Richmond, Va.-based Circuit City operates 15 Colorado stores, 11 in the Denver area.

The company said it cut jobs that paid "well above" market rates.

"We know this was not a good day for a lot of folks in our stores, and it should not be regarded as any negative comment on their job performance," Babb said. "Retail is so competitive that we really have to watch the cost of running the stores."

Fired workers received separation pay, Babb said. They may re-apply for lower-paid positions after a 10-week waiting period.

Circuit City pays about $10 to $11 an hour, on average, said Rick Weinhart, an analyst with BMO Capital Markets Corp. in New York. Entry-level pay probably is close to $8 for inexperienced workers, he said.

Chief Executive Officer Philip Schoonover was paid $8.52 million in fiscal 2006, including a $975,000 salary.

While other companies, such as Caterpillar Inc., have introduced two-tiered wage systems, where new workers make less, the firing of workers and offering to rehire them at a lower wage is rare.

"I don't think you're going to find too many examples" of this, said Ken Goldstein, labor economist for the Conference Board, a business research group.

Circuit City is trying to save money after reporting a net loss for December. Its stock has fallen 21 percent over the past 12 months as profit from selling flat-panel televisions plummeted.

Sales last fiscal year grew 8 percent, lagging behind an earlier forecast of up to 10 percent, Circuit City said on Wednesday.

Circuit City also said it will cut 130 IT jobs after agreeing to outsource some work to International Business Machines Corp. under a seven-year contract valued at $775 million.

Job cuts picking up

The 3,500 job cuts at Circuit City continue a trend of staff reductions at U.S. retailers.

2006 2007

January 13,430 1,804

February 2,099 4,936

March* 4,499 6,129

April 632

May 1,653

June 4,610

July 1,039

August 5,054

September 2,114

October** 11,178

November 2,914

December 4,197

Total 53,419 12,869*Includes 3,500 At Circuit City On Wednesday **October 2006: Tops Market Llc Chain Closed In Ohio (4,133 Job Cuts) Source: Challenger, Gray &Amp; ...

Circuit City Stores Inc.

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