Following three years of explosive growth through acquisition, Tweeter Home Entertainment Group is pulling back the reins of expansion in order to digest its new assets and maintain profitability.
According to president/CEO Jeff Stone, the high-end specialty A/V chain will scale back planned store expansions from 40 in fiscal 2003 to between 15 and 20 new units and six to eight relocations next year.
"The reason is straightforward," he said. "We need to spend more time integrating our acquired businesses so that all of our internal operating systems are unified, our store merchandising plans are more closely aligned, and our marketing efforts are consistent across the country."
Stone added that sticking to the original game plan might have impacted the company's profitability and stability. Noted senior VP/CFO Joe McGuire, "It is our collective opinion that profits come first. We will align the company's operating systems and profitability goals so that by the time we begin our next growth platform, our profit projections will be as healthy as our infrastructure."
Stone said the operational initiatives should be completed next year, after which the company would pick up the pace of new store openings with 40 in fiscal 2004, 50 in fiscal 2005, and 60 in fiscal 2006. Tweeter had originally planned to open 40 stores in each of those years.
McGuire added that sales have "stabilized," following what the company described as a challenging second quarter in which comp sales and net income declined. He said same store revenue was "slightly positive" for the first two months of the current quarter, and that despite some regional variations, "business has been a bit more consistent week to week."
Tweeter currently operates 162 stores and enjoyed $540 million in revenues in fiscal 2001.