The soft economy claimed two more CE retailers last week as Wolf Camera and Nationwide Computers and Electronics each filed for Chapter 11 bankruptcy protection.
Wolf, a 27-year-old specialty chain based here, says it bit off more than it could chew with the 1998 purchase of the 450-store CPI/Fox Photo and Proex chains from Eastman Kodak. The acquisition was the culmination of an aggressive growth-through-acquisition strategy that drove Wolf's store count from 100 stores in 1990 to more than 700 units by 1999. The company has since scaled back to 500 stores in 20 states.
"The reality is we have been unable to digest our acquisition of Fox Photo," said founder and CEO Chuck Wolf, who in hindsight called the purchase "a mistake."
According to Wolf's executive VP for corporate strategy, Stephen LaMastra, the chain has the support of its lenders and largest vendor, Kodak, which will minimize the impact on customers and employees as the company reorganizes. All stores are currently open for business, although an unspecified number of underperforming units will be closed and a "minimal" number of its 5,000 workers pink-slipped to help return Wolf to profitability.
Meanwhile, Nationwide Computers, a four-unit specialty retailer based in Edison, N.J., succumbed to steep losses stemming from waning PC sales, stiff competition and the soft economy.
Sales for the regional chain reportedly plummeted by 60 percent last year to $40 million, while losses swelled from $403,000 in 1999 to $6.9 million in 2000.
An attorney for the privately held company said it expects to emerge from Chapter 11 after consolidating operations and renegotiating with its creditors. The chain has already closed one store and will likely shut a second in order to focus on its Wayne, N.J., and Woodbridge, N.J., locations, he said.
Nationwide ranks 64th on TWICE's Top 100 CE Retail Registry and 34th on the PC Retail Registry (see p. 29). Wolf is No. 76 on the CE Top 100.