Canton, Mass. — Tweeter Newco, the newly formed, privately held portfolio company of Schultze Asset Management, will immediately employ funding from its new owners to resume its store remodeling program.
The chain has earmarked 40 stores for partial retrofits that will incorporate key features of its next-generation “Playground” format, which uses notional spaces to show A/V products, systems and controls within home-like settings. The company currently operates six Playground stores, which are exceeding older format units on a range of performance metrics.
In his first conference call following last week’s acquisition, president/CEO Joe McGuire said the retailer is presently drawing up a timetable for the conversions and expects work to begin on the first 10 stores within the next two weeks. The remodeling will proceed through October, pause for the holiday selling season, and resume early next year.
Locations were selected on the basis of providing “the most bang for the buck” and fastest turnaround times, he said.
Looking back on the events of the past week, McGuire described an “unbelievable change in mood” at the company once the $38 million acquisition was completed. The Schultze buyout allowed Tweeter to put its Chapter 11 bankruptcy behind it and attain a fresh start, he said, although the bankruptcy was one of the “cheapest” in CE retailing, with the old Tweeter Home Entertainment Group owing less than $4 million to the trade.
The chain begins life anew as a $500 million a year concern, down from $775 million in 2006, with 103 stores, 2,000 employees, and its management team, buyers and vendor matrix essentially intact. No further store closings are presently planned beyond last spring’s 49 lease terminations, nor are there any current plans for additional layoffs.
Asked about Schultze’s decision to retain McGuire and his executive staff, the CEO replied, “Schultze bought more than just the assets of Tweeter, it bought the strategy, and this management team is the architect of that strategy.”
Tweeter will also maintain its membership within the Progressive Retailers Organization, or PRO buying group, which re-admitted the newly formed company on Tuesday.
Going forward, Tweeter will continue “to drive higher-end, elegant solutions to a discerning, upper-end portion of the CE industry,” McGuire said, and will work to migrate its revenue mix from the current 65 percent retail, 35 percent custom installation to a 50-50 split.
He described the vendor community as extremely supportive of the acquisition by Schultze, and said he expects to begin re-establishing regular terms with manufacturers once confidence in Tweeter is restored.
Chief marketing officer Patrick Reynolds added that Tweeter will mount a new mass media marketing campaign within the next 30 to 60 days that will use a “narrow and deep approach targeted at discerning customers.”