After five years and close to $500 million in red ink, Cablevision Systems Corp. has finally pulled the plug on its ailing New York metro area CE chain, The Wiz.
Unable to stanch the losses after multiple management shakeups, store closings and redesigns, the entertainment and cable provider announced that it would exit the consumer electronics retail business by the end of June.
The company, which has been under pressure to curb its debt and boost its bottom line, said it is "exploring options" for the remaining 17 Wiz locations, including selling the chain or shutting its doors.
In a written statement Cablevision noted that "continuing to operate the stores is no longer a viable option … as business conditions at the retailer eroded due to a weakened retail economy and other factors."
Indeed, while The Wiz's problems run longer and deeper than the current economic climate, the difficult holiday selling season proved to be the last straw, as the chain recorded a fourth quarter pro forma sales decline of 33 percent, to $77 million, against a loss of $21 million.
As Cablevision retail president Jeffrey Yapp told TWICE last summer, "Cablevision has shown tremendous patience. But it would be naive to think it could go on forever. They're not going to support a money-losing operation." Yapp, the last in a succession of managers brought in to turn The Wiz around, said his mandate was to produce "a significant
improvement in operations by the fourth quarter" — the unspoken implication being, or else.
All told, The Wiz has lost nearly a half-billion dollars including write-downs and restructuring charges since Cablevision acquired the bankrupt retailer from the founding Jemal family in 1998 for a reported $80 million.
Cablevision chairman Charles Dolan had envisioned the 53-unit chain as an ideal platform from which to sell the company's various products and services, including TV and Internet cable subscriptions and modems. Wiz stores also sell tickets to sporting events for the Cablevision-owned New York Knicks, Rangers and Liberty professional sports teams, and to entertainment events held at its Madison Square Garden and Radio City Music Hall properties. Cablevision customers can also pay their bills and attend to other service matters at the retail locations.
But the 27-year-old chain, whose splashy ads and flashy stores had helped make it a New York area icon in the 1980s (when it was called Nobody Beats the Wiz), was unable to find traction under Cablevision's shifting management teams and store design strategies. Compounding the problem was an already cut-throat CE market that claimed more than a dozen regional specialists throughout the 1980s and 1990s, and which became superheated following the re-entry of Circuit City and more recent incursions by Best Buy.
Cablevision and Yapp gave it their last shot during the third quarter by closing all but the 17 most viable stores, retrofitting them with a new, interactive format, and touting the changes in an ad campaign that urged shoppers to rediscover "The New Wiz."
But the retailer's role as an adjunct to Cablevision's core cable business diminished even further in the fourth quarter. Senior executives said that The Wiz had dropped to third or fourth place among its cable modem distribution channels, accounting for only 5 percent of sales compared to 22 percent earlier in the year, supplanted by the company's Web site and inbound call centers.