Short circuit

Published 4:58 pm Tuesday, January 20, 2009

Two Lynnwood retailers — one a major national electronics retailer, the other a regional furniture store — are closing.

Circuit City, which has operated a store at 2800 196th St. SW, since 1996, announced Jan. 16 its plans to liquidate all company assests and lay off more than 30,000 employees. Company spokesman Bill Cimino declined to give any details about the number of employees at the Lynnwood store or when the store will close its doors.

In a press release posted on the company’s Web site, acting CEO and board vice chairman James A. Marcum said the company is “extremely disappointed by this outcome…regretably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction in the limited timeframe available, and so this is the only possible path for our company.”

Circuit City is the third big-box store to close in Lynnwood since 2007, when furniture giant Levitz closed its store and 2008, when Linens &Things closed.

Meanwhile, Underhill’s Fine Wood Furniture, 3930 196th St. S.W., will be one of four regional Underhill’s stores to close March 31 but will later reopen under a different name, said Josh Underhill, general manager.

“The economy’s been a big factor in that,” he said. “The furniture industry’s been hurting in general for about a year and half now. “

He said furniture sales are closely tied to house sales. As house sales slumped because of the mortgage crisis, furniture sales dropped, too.

“Furniture is one of those purchases you can postpone,” said Underhill, son of company CEO Tom Underhill.

Still, he said, “there’s a light at the end of the tunnel: I’m going to be opening a new store at our best (performing) store, the one in Lynnwood. I’m going to take our best performer and make kind of a recession-proof company.”

He said he hasn’t decided on a name for the new, smaller furniture store, in the same location, but the “working title” is Josh Underhill’s Furniture.

Shortly after the Circuit City liquidation announcement, signs went up in front of the Lynnwood store advertising 30 percent off merchandise.

Sales tax collections have been declining in all retail sectors for more than a year, said city of Lynnwood Finance Director John Moir.

Though by law, cities cannot publicly release the sales tax receipts from individual stores, information about retail sectors is publicly available.

The city’s share of sales taxes on furniture and home furnishings declined about 21 percent from 2007 to 2008, mostly because of a change in the way sales taxes are distributed, Moir said.

Electronics and appliance stores saw sales tax contributions to the city decline about 12 percent during the same period, Moir added.

The new, destination-based sales tax distribution, known as Streamlined Sales Tax, gives sales taxes to cities where the purchaser lives, rather than where the product is shipped from or where the sale takes place.

This new approach helps cities without retail warehouses, like Mountlake Terrace and Brier, and hurts cities like Lynnwood, where retail warehouses are plentiful.

To make up that discrepancy, the state of Washington agreed to essentially reimburse “loser” cities. That compensatory income from the state has been less than anticipated, officials say.