Engadget recently posted a rumor claiming a Best Buy memo was being circulated within the company claiming it has on authority (but not "verified) that CompUSA's holiday revenue has been cut in half this year and liquidators are being called in to shutter the rest of the company's stores.
Now, it should be mentioned that CompUSA has already shut down about 128 stores with the help of those same liquidators and ironically, that shut down occurred in February of this year -- the same month current stores are expected to close next year.
But after reading the rumor, which has yet to be substantiated in any way, I thought I would dig a little deeper to find out exactly what's going on with CompUSA and whether or not there is any financial backing to this claim. And while everyone already knows the company is in dire financial straits, the truth may surprise you.
Simply put, CompUSA is on the way out and by the end of February, look for empty parking lots and gutted stores.
CompUSA is a wholly-owned subsidiary of U.S. Commercial Corp S.A.B. de C.V., which is a Mexican company servicing consumers is most product categories. And much like its subsidiary, US Commercial Corp S.A.B. de C.V. is in poor financial condition.
According to thecompany's March 31, 2007 quarterly statement of earnings, the U.S. Commercial Corp S.A.B. de C.V. lost a whopping $198 million (Mex$2.2 billion). Amazingly, this represents a greater loss than the company's annual net loss in 2005 and falls slightly below the 2006 net loss, which amounted to net losses of $185 million and $333 million, respectively.
But the story doesn't quite end there. CompUSA has been one of the driving factors behind its parent company's financial downfall. According to its latest filing (September 2007), CompUSA has incurred a net loss of about $44.5 million. To make matters worse, the electronics store is on pace to lose about $200 million this year alone.
Sad as it is, the writing is on the wall. CompUSA is not only in dire financial straits, the company has been losing money at such a pace that operating a business has become unconscionable. And while there is no way to confirm that CompUSA will close its stores, from a purely financial perspective, it should have done it a year ago.
Of course, most of us probably already knew the company was on its way out. If you have a CompUSA left in your area and you've gone there in the last few months, you've probably witnessed just how dead the store is. Do you ever see more than ten people shopping? Is anyone actually buying anything? I doubt it.
But if you head down to your local Best Buy, I can almost guarantee the store is lined with people getting information about products and walking towards the register to pick something up.
And if that's true, what makes CompUSA an also-ran and Best Buy the benchmark for brick-and-mortar stores? Simply put, it's the experience.
CompUSA offers nothing to the consumer that would coax them into driving to one of its stores. Not only does the company charge a premium on products that it shouldn't, CompUSA has become a store that stocks only half of what we want and everything we don't. After all, if you wanted to buy a few DVDs and pick up a digital camera while you're at it, would CompUSA be your first choice?
As if that wasn't enough, this once profitable company has become a victim of the Internet. Why would I buy anything from CompUSA when I can go online and get it for a fraction of the price? And although the company offers an online store, it still offers no real benefit to me.
Unfortunately, there's not much more CompUSA can do to pull itself out of its tailspin. With a financial loss that keeps growing, fewer customers patronizing the store and an outright pathetic shopping experience whenever you go into the store, this company has nothing left in the tank.
I think Best Buy's internal memo was correct: this company is done by February.