It has been a fraught week for Tweeter Newco LLC, the A/V specialty chain acquired by Shultze Asset Management in July. On August 17, the company trimmed its corporate staff by "half," approximately 80 staffers at the home office in Canton, MA. It was the second corporate re-structuring since January, when 20% of the corporate staff was laid off.
Tweeter chairman George Schultze, who is also principal of Schultze Asset Management, told TWICE that the layoffs were "absolutely necessary" to keep corporate overhead from "strangling the stores." Schultze also said that all departments were affected, although the senior management team was "not yet affected."
Insiders, however, painted a different picture. Stereophile's anonymous sources claimed that all of the human resources, payroll, and finance departments were let go—all of the departments are essential for a company that intends to stay in business. All of the buyers were let go, sources say, and most of the marketing department. Sources also said that in order to cut checks, the CEO and CIO had to do the payroll last week, since there was no one left in finance.
On August 21, Tweeter president and CEO Joe McGuire announced his resignation, effective as of the day before. TWICE reported George Schultze saying that McGuire was "unable to execute the turnaround strategy." Insiders familiar with McGuire say he was uncomfortable with the path his corporate overlords had set for the company and did not relish managing a decimated, demoralized staff.
When Schultze Asset Management presented its bid to purchase Tweeter in June, it claimed it would increase the number of Tweeter's "playground stores," in which potential buyers see the products in "sets" that simulate the homes of high-end consumers. However, this strategy seems impossible to achieve when the entire playground development staff was purged in the corporate makeover. Since the playground concept was widely touted as "the future of Tweeter," we are forced to conclude that Schultze has other plans for that future.
On August 24, Schultze announced the appointment of George Granoff as CEO. Granoff's background is in turning around large retail chains, including Bradlees, Ames Department Stores, Party City, and The Art Store. Schultze lauded Granoff's "established record of focusing organizations on their core strengths. He has an incredible drive to execute strategy to increase profitability, differentiate stores, and develop resilient organizations."
Mr. Granoff's successes in the past notwithstanding, we're betting the copy shops of Canton are doing a land-office business printing executive resumes this week.
Updated 08/28/07: Patrick Reynolds, Tweeter's chief marketing officer contacted us after this story appeared, concerned about what he deemed inaccuracies. While he agreed that many departments were "deeply impacted," no department was eliminated, he told us, nor were any departmental functions left unmanned. While we had Mr. Reynolds on the phone, we asked if Tweeter planned any store closings in the wake of the reorganization. "We're still talking to virtually all our landlords, which we're entitled to under the terms of the bankruptcy, so that's ongoing," Reynolds said. "There are no plans, concrete or otherwise, to eliminate other stores at this point."
And the commitment to the Playground concept stores? "We're still planning to go forward with that, although we are going to have to do so at a more measured pace. But the plan is still to retrofit the stores—and soon, in fact." When that happens, you'll read it here.
