Wiz stores in bankruptcy: Only a week after being acquired from Cablevision by GBO Electronics Acquisition LLC, The Wiz stores initiated a bankruptcy petition in the District of Delaware to "maximize company assets," according to a March 14 press release from TW Inc., as The Wiz is now known. The 17-store electronics chain is seeking protection from creditors under Chapter 11 of US bankruptcy law and approval to conduct going-out-of-business sales at its stores in the New York metro area.The Wiz stores are already selling deeply discounted goods, said TW Inc. president David Peress. "To increase store traffic and raise cash, all stores are currently offering savings on our entire inventory of televisions, DVD players, computers, camcorders, home audio, and more," Peress noted. "We greatly appreciate the cooperation we are receiving from The Wiz's dedicated and loyal employees as we make our way through this difficult time."Once the court of last resort for desperate companies, bankruptcy proceedings now are often the first resort for companies who wish to jump-start their businesses—a miraculous wave of the judicial hand eliminates most debt, and a new corporate name legally separates the business from its former obligations and relationships. The March visit to bankruptcy court was the second time around for The Wiz. The once high-flying chain was in bankruptcy when it was acquired by Cablevision Systems in 1998. TW Inc. hasn't announced whether or not The Wiz will be reborn after its going-out-of-business sales are over.
Wherehouse reorganization: West Coast music and movie fans can still find bargains at about-to-be-closed Wherehouse stores. Also in Chapter 11 bankruptcy—its second in seven years—Wherehouse is shutting down many of its stores and is consolidating its business in its best-performing locations. As of early March, doomed Wherehouse stores were selling CDs at 30% off and DVDs at 20% off already discounted prices. The stores also have large stocks of used CDs at a few bucks apiece.Ultimate Electronics up and down: 2002 was generally a tough year for retailers, especially those in the electronics sector, but Denver's Ultimate Electronics seems to have bucked the trend in at least one statistic. The upscale retailer reported a 13% increase in sales for the fourth quarter, ended January 31, with total revenue of $242.5 million, compared to the $214.7 million reported for the same period in 2001. Comparable store sales were off by 8%, and net income for the quarter declined to $2.5 million from $6.8 million.Television and direct broadcast satellite products were Ultimate's strongest category, accounting for 43% of its total, a gain over the 39% during the same period the previous year. Audio accounted for 19% of total sales, a slight drop from the 21% it enjoyed in the last three months of 2001. Ultimate CFO Alan Kessock predicts sales volume for the coming year at $815 million to $830 million, with a strong finish in the third and fourth quarters.
Good Guys down: San Francisco–based retailer Good Guys reported a drop in business for its fourth quarter, ended February 28. Net sales totaled $229.5 million, a 12% decline from the $259.2 million recorded in the fourth quarter of the previous year. The decline was partly attributed to the closing of seven stores and partly to consumer uncertainties about the economy. Good Guys also reported an 8% drop in comparable-store sales. The company's top product category was flat-panel TVs (plasma displays and LCD screens), which sold more than 350% better than during the previous year. Good Guys' net sales for the year were $750 million, an 8.5% drop from the previous year's $819.7 million.Best Buy, Circuit City slip: North America's two largest consumer electronics chains also had a difficult fourth quarter. Eden Prairie, MN–based Best Buy reported a 0.2% decline in comparable store sales, with total sales up 16% to $22.7 billion. (The company added dozens of new stores last year.) Total revenue grew 9% to $7.6 billion. Richmond, VA–based Circuit City saw a 5% fall in revenue for the quarter ended February 28, with a total of $3.2 billion. Circuit City recently announced a cutback of its sales force and service centers and a restructuring of its pay system to cope with the changing economy, while Best Buy announced the shuttering of 128 Musicland stores. Both companies suffered during the winter storms that paralyzed much of the country in February, and both reported that flat-panel televisions were their strongest sellers.One statistical oddity in the Best Buy report was a note that its Pacific Northwest Magnolia Hi-Fi stores saw a 28% rise in revenue during the fourth quarter, with total sales of $40 million. Future Shop, Best Buy's Canadian chain, also enjoyed brisk business during the quarter, with total revenue up 23% for a total of $580 million.
