Tweeter Sold To Liquidator
Consumer Electronics Chain Closes Distribution Centers
By Joseph Palenchar -- TWICE, 10/31/2008
Canton, Mass. – Tweeter was purchased by a liquidator Thursday night after closing all of its distribution centers and pushing all inventory out to its stores, TWICE learned.
Company managers are currently being notified by conference call.
Last night, management held a conference call with top regional personnel to inform them of the decision, according to sources with close ties to the chain. The name of the liquidation company wasn’t mentioned in that call.
This morning, TWICE phoned a Tweeter buyer, whose voice mail message said, “They have closed the corporate offices of Tweeter.”
Tweeter management hasn’t returned calls.
Earlier this week, Tweeter was telling employees that it was closing all of its distribution centers in a move described by management to employees as saving up to $12 million per year, according to various industry sources.
Under the plan, suppliers would ship to stores directly.
“This is a measure that will help them to survive and move forward,” said one marketer who learned of the move from Tweeter employees earlier in the week. “This is not being positioned as a liquidation move.”
While several vendors contacted earlier this week by TWICE declined to go on the record about the supposed motives behind the warehouse closings, some were skeptical of management’s explanation. They said it was an unheard of move for any type of retail chain with Tweeter’s store count and store sizes. These vendors feared the warehouse closings were a precursor to liquidation.
In the days before the closings, some Tweeter vendors said they were unable to contact chain management.
Two marketers, however, thought the move was a plausible way to cut overhead and could work. “Most stores are over-built,” one of the marketers said. “Today’s environment does not require Tweeter to have 10,000-20,000 square-foot stores. Also, their car install business is only a shell of its former self, so my guess is that there are plenty of spaces to [store] whatever hodge-podge of inventory they want. I would also guess they don’t have a lot of inventory.” The chain also uses distributors to supplement its need, the marketer said.
Another industry executive pointed out that it ships products to “hundreds of little guys,” although “it costs a lot of money.” For vendors, shipping to individual Tweeter stores via UPS and Fed Ex rather via truck to a central warehouse “would be an additional expense for vendors, unless Tweeter pays the freight,” the marketer said.
One long-time retailer was skeptical that Tweeter intended to cut costs. “You don’t ship inventory out [to stores] unless you’re ready to get rid of everything,” he said. In fact, an employee at one Tweeter store acknowledged last Thursday that the chain was sending email invitations to past customers to participate in a special sales event over the weekend.
The closings followed the recent departure of Tweeter CEO George Granoff in October after 13 months. After Granoff left, Tweeter owner Schultze Asset Management Group brought in Craig Boucher, a corporate restructuring expert, to run Tweeter on an interim basis. Schultze bought Tweeter for $38 million in a bankruptcy auction last year.
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