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Cambridge Exits Retail, Makes Direct Decision

8/04/2008 02:00:00 AM Eastern

Cambridge SoundWorks returned to its direct-marketing roots by pulling back completely from selling its branded audio products through brick-and-mortar CE stores.

By eliminating costs associated with distribution to retailers, marketing director Maria Cataldo explained, Cambridge can invest more in its growing direct-sales channels and in product development. The cost savings also made it possible to reduce prices on Cambridge-branded tabletop radios, speakers and other products by anywhere from 20 percent to 60 percent, she said.

Cambridge stopped shipping to its dealer base of about 70 storefronts in July, which Cataldo said did not account for "a major part of our sales for the past fiscal year." The accounts included Fry's and J&R. Cambridge also closed its two remaining owned-and-operated outlets earlier this year, having closed 13 other company stores in 2007 because they were too small to display video in lifestyle settings and too small to offer stepped-up custom installation services, the company said in early 2007. The company's store count peaked at 30 in the late 1990s.

With the new distribution direction, Cambridge SoundWorks-branded products are exclusively available via www.cambridgesoundworks.com and a catalog call center reachable at (800) FOR-HIFI. Those products include table radios, in-room speakers, architectural speakers, computer speakers, portable and transportable speakers, and headphones. The company continues to sell a limited selection of A/V products by other brands.

The changes at Cambridge coincide with operating-expense reductions by its parent, which in the quarter ending June 30 expected to incur $15 million in restructuring charges. For the nine months ending March 31, Creative posted an operating loss of $22.3 million, compared with a year-ago loss of $43 million, with net income falling to $12 million from the year-ago $47.5 million. Sales fell to $597.4 million from $749.7 million.

Cambridge SoundWorks was founded in 1988 as a manufacturer-direct seller of Cambridge-branded home speakers via its own catalog. It opened its first store in 1991 and then expanded its brick-and-mortar presence after going public in 1994. It became one of the first audio brands to sell its products direct to the consumer via the CompuServe Network in 1994. The company's selection grew in the early- to mid-1990s to include other-brand audio electronics to complement Cambridge-brand speakers. In 1997, Creative Labs bought Cambridge.

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