Saturday, December 8, 2007

R.I.P. CompUSA "The Computer Superstore"

WSJ is reporting the final liquidation of the remaining 103 CompUSA retail stores.

Slim to Close Last CompUSA Stores

Mexican telephone and retail magnate Carlos Slim, in a rare defeat, will exit the U.S. consumer electronics market, shutting the last 100 CompUSA Inc. stores after sinking about $2 billion into the business.

Gordon Brothers Group, a Boston-based retail store liquidator, will oversee a piecemeal sale of the Dallas-based business, the company said in a statement. Financial terms were not disclosed. Stores will remain open through year-end under the supervision of Gordon Brothers, which will also negotiate the sale of real estate and other assets. Two law firms were hired to represent creditors, CompUSA said.

"An orderly and expedited wind-down and asset sale process is the best option for CompUSA and its creditors," Bill Weinstein, a principal at Gordon Brothers, said in a statement. Mr. Weinstein was named interim president of the firm. He was unavailable for immediate comment.

CompUSA did an estimated $4 billion in annual sales last year, but with store closures in February, sales were expected to shrink to about $1.5 billion this year, according to industry executives. The business has not been recently profitable, they said.

Mr. Slim, the powerful chairman of Telefonos de Mexico and operator of a string of retail businesses in Latin America, has long coveted a big name in the U.S. retail market. He took his first stake in the business in 1999 and expanded the business through acquisition. After taking a minority stake in the retailer, he later spent $800 million to take the company private.

In 2003, CompUSA acquired California consumer electronics chain The Good Guys Inc. In 1998, he purchased Computer City from Tandy Corp.

The retailer has struggled for years, hurt first by competition from direct personal computer sellers such as Dell Inc. and more recently by intense competition in consumer electronics. Bigger rivals such Best Buy Inc. and Wal-Mart Stores Inc. have been able to offer greater selection and lower prices for flat-panel televisions and other consumer electronics gear.

As reported, CompUSA had been in discussions with rivals about selling parts of its retail holdings, and a spokesman for the new management says the talks are ongoing.

"Active discussions are under way to sell select stores in key markets as well as the company's highly-regarded technical services business," CompUSA said in its statement.

People familiar with the situation have said that CompUSA has been talking to TigerDirect, an arm of Systemax Inc., a Port Washington, N.Y., PC maker and electronics marketer, buying stores and Internet operation. In addition, it has held talks with Hilliard, Ohio, based Micro Electronics Inc. about the sale of about 10 stores.

In early 2003, Mr. Slim made an unsolicited $1.5 billion bid for Circuit City after accumulating about a 9.2% stake in the company. He later sold the shares after being rebuffed by the Circuit City board. Since then, he has pursued investments in retail outside the U.S., recently opening the first Saks department store in Mexico City under a license with Saks Inc.

In February, it announced plans to shutter 126 stores, more than half of its then-total, and accepted a cash infusion from U.S. Commercial Corp., a unit of Mr. Slim's holding company, Grupo Carso. The money was intended to finance a turnaround effort that targeted small businesses and affluent consumers.

1 comment:

  1. Good riddance. Overpriced since day one. Viva la Best Buy!