will shut down approximately
half of the Computer City outlets it bought from Tandy
now that the $211 million acquisition of its
formal rival has been finalized.
The location consolidation comes amid increasing competition among
companies that make a living selling computers and computer components.
Decreasing margins have prompted a number of these companies to acquire
competitors, close outlets and/or reduce overhead.
One retailing giant, Egghead, for instance, recently shifted
its business onto the Net and shut forever all of its once ubiquitous
CompUSA and Computer City were heated rivals in the computer retailing
world for a number of years. In recent years, however, Computer City went
through a series of mishaps and management changes which weakened it
competitively. CompUSA announced that it was buying Computer City in June.
Fifty of Computer City's 101 U.S. and Canadian stores will be closed after
liquidating the inventory, CompUSA said. The remaining 44 U.S. Computer
City stores and seven Canadian stores will continue to operate, CompUSA
said, and be progressively merged into the CompUSA umbrella.
Not including the newly acquired stores, CompUSA, the nation's largest
computer retailer, operates 164
stores in 73 metropolitan areas in the U.S.
"We are very pleased with our acquisition of Computer City, which we
believe will further CompUSA's position as the nation's premier provider of
personal computer-related products and services,'' CompUSA CEO James Halpin
said, in a statement.
About 150 positions at the Computer City corporate headquarters have been
eliminated, CompUSA said. At the store level, the company said that after
liquidation sales are over, CompUSA will "evaluate the remaining store
staff and many employees will be offered positions."
"We would like to keep as many (employees) as possible that make
sense to keep those stores profitable," CompUSA executive vice president
and chief operating officer Hal Compton said in a conference call with
analysts. "But when you close 50 stores and you consolidate home offices
and are looking for the synergies and savings that come with it, obviously
there are going to be some jobs that go away."
Although the integration process will take time, CompUSA will try to
quickly implement many changes before the end of November to capitalize on
the holiday buying season. The CompUSA name will go up on the outside of
the outlets as soon as possible.
"While the total conversion of the 44 U.S. stores that will remain open may
take 12 to 24 months, substantially all our business methodology and
procedures will be implemented within the next 60 to 90 days," Halpin said
in a conference call to analysts.
The conversions include "changing the interior and exterior store signage,
implementing our merchandise assortment, deploying the Apple
store-within-a-store concept, and also (installing) our new entertainment
area in every store," Halpin said in the conference call.