Tweeter Opco, formerly Tweeter Newco, is opening its first new store since its acquisition last summer by Schultze Asset Management, and will test a new store format in Boston.
The new store, set to open in early April, will be a 6,000-square-foot “Playground” showroom in Chicago's Lincoln Park district. The Playground format showcases A/V products and whole-house systems within home-like vignettes, and has been “way outperforming” older stores on a range of performance metrics, Tweeter president/CEO George Granoff told TWICE.
“The new store is a demonstration of our intent to move the business forward,” he said.
The Lincoln Park location will be Tweeter's sixth such showroom, and replaces within the Chicago market a mall-based store overlooking Michigan Avenue whose lease was rejected.
The new prototype store, slated to open for testing in mid-April, is a retrofit of an existing Tweeter location near company headquarters in Boston. The format will feature new displays and “bullet-proof” A/V demos that are designed to “delight customers with an engaging and flawless in-store experience,” Granoff said. “It's quite a step forward.”
The new concept is also more cost-effective than the current retrofit model, which incorporates elements from the Playground stores but carries a price tag of about $800,000 per location. “It's costs almost as much to open a new store, and I don't have $75 million,” he said.
Tweeter remodeled six stores this past fall, and has closed seven locations since August in overstored markets or where local conditions had changed since the leases were signed. It currently operates 95 stores nationwide.
The new format store will have a soft opening in mid-April, followed by extensive testing and possible modifications.
Granoff, a former president/COO of the Ames and Bradlees discount chains, said Tweeter had been keeping a low profile while he learned the lay of the land. In the meantime, the company hired a chief financial officer, David Pearce, who joined in January and has been busy taking costs out of the system and restructuring its service and distribution networks. The moves include a reduction in warehouse space from 500,000 square feet to less than 200,000 square feet.
As a result, the chain operated “very close” to break-even during the fourth quarter despite a significant drop in sales going into the holiday period, Granoff said, having lost more than a third of its store base year-over-year. The company is currently operating on or close to plan, and management is hopeful it will post results that are cash-flow positive during the current calendar year.
Granoff added, “We're paying all of our bills on time,” and that an $80 million financing package announced in September — which includes a $60 million credit line with Wells Fargo and a $20 million commitment behind the bank from Schultze — remains in place.
Schultze, a Purchase, N.Y.-based investment group specializing in distressed businesses and special situations, purchased the company for $38 million in a bankruptcy auction last July.