The economic downturn has taken its toll on Circuit City. The electronics retailer announced Monday that it will shut down 155 stores in 28 states starting Tuesday, a move that will see a 17-percent reduction its workforce.

"The company expects that impacted stores will not open on Tuesday, November 4, and the store closing sales will begin on Wednesday, November 5," according to a statement. "The company expects the sales to be completed no later than calendar year end."

California will see the largest number of store closures, with 24 in cities like Compton, Palo Alto, and Santa Barbara, according to a list released by Circuit City. The company will continue to operate 76 stores in the state.

Georgia will lose 19 Circuit City stores, including four in the Atlanta area. Illinois and Arizona meanwhile, will lose 14 and 13 stores, respectively.

Circuit City currently has a presence in 45 states. After the store closures, California will continue to have the largest number of Circuit Stores, followed by Texas with 55 and Florida with 49.

Texas will lose nine stores in the closures, while Florida will lose seven. Stores that closed had "lower net sales, a lower close rate and a lower gross profit margin rate. [They were] also unprofitable when marketing expenses were allocated to the individual store-level results."

Meanwhile, the company will not open 10 new stores that had been planned for 2009, and will try to renegotiate the leases on existing stores. "We deeply regret the impact today's announcement will have on our associates, our guests and the communities where these stores are located," according to the company.

The company cited several reasons for the store closures, though the recent financial crisis has had the biggest impact.

"Since late September, unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply," James A. Marcum, vice chairman and acting president and chief executive officer of Circuit City Stores, said in a statement. "The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors. The combination of these trends has strained severely our working capital and liquidity, and so we are making a number of difficult, but necessary, decisions to address the company's financial situation as quickly as possible."

The economic turmoil has prompted several of Circuit City's vendors to tighten their belts as well.

"Certain of the company's vendors have set more restrictive payment terms than in previous quarters, including in some cases requiring payment before shipment," according to a statement. "Vendors also have limited the credit available to the company for purchases, including in some cases not providing customary increases in credit lines for holiday purchases."

As a result, "the current mix of terms and credit availability is becoming unmanageable for the company."

Meanwhile, Circuit City claims it has been unable to collect an $80 million income tax refund the company believes it is owed.

In April, Blockbuster announced that it offered to acquire Circuit City Stores for $1.3 billion, but Circuit City declined the offer.