US electronics retailer Circuit City has become the latest industry name to scale back its operations.

The company announced on Monday that it would be closing 155 stores throughout the country, representing about 20 per cent of its total retail operation.

Circuit City did not give an estimate on how many of its employees would be affected, but job losses from the closures could reach as high as 7,000.

The move will reduce dramatically the footprint of the second largest electronics retailer in the US just before the holiday shopping season.

Circuit City chief executive James Marcum explained that the cuts were a result of reduced sales following faltering consumer confidence, combined with renewed pressure from the credit market and an ongoing tax dispute.

"Since late September unprecedented events have occurred in the financial and consumer markets causing macroeconomic trends to worsen sharply," he said.

"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."

In addition to the store closures, Circuit City plans to renegotiate its leases on existing stores and scrap plans for some future store openings.

The company estimates that the closures will reduce its presence in 55 different US markets and cut revenues by $1.4bn (£887m).

The move adds yet another major name to the growing list of IT and consumer electronics firms forced to make major cuts in recent weeks. Other big name layoffs include Xerox, Yahoo and Micron.