In a continuation of a profit-oriented restructuring started late last year with the return of founder Ron Unkefer as CEO, Good Guys announced a series of new steps designed to save some $9 million annually through a merchandising consolidation that will reduce staffing needs at its 79 stores.
The electronics specialty retailer said it will take an unspecified one-time charge in the current quarter to cover costs stemming from the changes.
Those charges, combined with the usual seasonal slowdown, “are expected to yield a substantial loss” for the fiscal second quarter ended March 31, though the chain still expects to show a profit on the year.
“For the past several months, we have been concentrating on strengthening our product differentiation and enhancing our financial position,” said Unkefer. “Now it is time to extend those efforts by introducing initiatives that have an immediate impact on the store floor and the overall customer experience, as well as our financial performance.”
The new changes, “coupled with the aggressive changes we have implemented over the past two quarters, should contribute significantly to our profitability for the foreseeable future,” he stated.
At the heart of the change is the elimination of a separate personal electronics department in its stores, with the products to be shifted to increase the selection at the ongoing video, audio and mobile departments.
Affected managers and experienced salespeople will be given new assignments, though some 300 entry-level sales jobs will be eliminated. Among other moves, sales managers are being offered incentives to participate in the sales process; cashiers are being given responsibility for handling financial applications, service requests and returns; and store department scheduling is being adjusted to reflect traffic patterns and eliminate over-staffing.
On the corporate level, Good Guys had eliminated its in-house ad production department in favor of outsourcing. It also is consolidating staff space into two of the five floors at its San Francisco headquarters and will lease out the remainder.
The rental income, Good Guys said, is “expected to nearly eliminate all remaining corporate real estate costs.”
Separately, Good Guys filed a registration statement with the SEC for the sale by outside holders of 281,000 shares. Of those, 160,000 are being offered by the investment firm Morgan Keegan and 121,000 are from the Citron Haligman Bedecarre ad agency. None of the proceeds from the sale will go to the company.