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Tweeter has experienced dramatic changes in the past two weeks with cutbacks of half the corporate staff, the resignation of president/CEO Joe McGuire and the naming of a new CEO.
Tweeter chairman George Schultze, principal of parent company Schultze Asset Management, told TWICE that the cuts were difficult but "absolutely necessary" in order to reduce excess corporate overhead that was "choking the stores."
Schulze confirmed that approximately 80 staffers were let go, most based at Tweeter headquarters here, and that all departments were affected, including the corner office. He said McGuire, who had helmed the A/V chain for the past two years, was "unable to execute the turnaround strategy."
George Granoff was named the new CEO of Tweeter Newco. His experience includes the roles of president and COO at both Ames Department Stores and at Bradlees. He has also been CEO of Party City, CEO of art specialty retailer The Art Store, and founder and CEO of Sherborn Optical.
In commenting on the appointment chairman Schultze said, "For Tweeter, we now have a fresh voice at the top. George [Granoff] is new to Tweeter but brings such a wealth of experience. Without a doubt, we're now ready to move forward swiftly. It's a great day for this great company."
No additional departures from Tweeter's senior management team were anticipated, Schultze said. The group presently includes senior VPs Gregory Hunt (chief financial officer), Robert Staples (sales and installation services), Philo Pappas (chief merchandising officer), Patrick Reynolds (chief marketing officer) and William Morrison (chief information officer).
The downsizing was limited almost exclusively to corporate staff, Schulze noted, and there were no reductions in stores or store-level personnel. There are no plans to divest the headquarters facility, although some of the excess space may be sublet, he said.
Schultze said the downsizing "should be favorable to our customers and stores as the cuts eliminate red tape and bureaucracy at headquarters and allow us to refocus on our core competencies."
The corporate restructuring was the second since January, when 20 percent of the Canton crew was let go. Tweeter later dismissed 20 percent of its nationwide workforce along with its closure of 49 stores.
No further changes are anticipated nor are there are any plans to sell the chain, Schultze said. He described Schultze Asset Management as a "long-term, committed investor," and said the go-forward strategy is to simply be "a much more focused, 'leaner and meaner' Tweeter that is a little closer to the end customer."
In a prepared statement, Schultze said the staffing reductions "should allow our remaining stores significantly more breathing room so we can afford to restock them with the critical inventory our distinguishing customers demand."
He continued, "Although I cannot guarantee it, our actions should help ensure that the remaining employees do not receive termination notices in the near future. The cuts we are making are deliberate but painful and will surely be difficult for everyone involved. Even so, we hope the remaining team members will see Tweeter 'rise from the ashes' and return to cash flow profitability despite a difficult tour through bankruptcy and extraordinary changes in the way we operate and in the marketplace we serve."
Schultze, a Purchase, N.Y.-based investment group specializing in distressed businesses, acquired Tweeter in a bankruptcy auction in July for $38 million. The specialty A/V chain filed for Chapter 11 bankruptcy protection in June amid a cash crunch stemming from faltering sales and steep lease termination payments as it closed a third of its stores.
McGuire joined Tweeter in 1996 as chief financial officer after the chain acquired Bryn Mawr Stereo and Television, where he had served as chief financial officer for 10 years. He was named president/CEO of Tweeter in July 2005, succeeding Jeff Stone who left to head Tivoli Audio.
Schultze is presently bankrolling a 40-store remodeling program for the retailer that incorporates elements of its next-generation "Playground" store format. Retrofits of the first 10 stores were scheduled to begin last month. — Additional reporting by Colleen Bohen
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