Tandy Closing 213 Video Concepts, McDuff Mall Stores
DALLAS (AP) _ Tandy Corp. said Tuesday it will close 213 Video Concepts and McDuff stores as it continues a two-year process to sharpen its focus on the Radio Shack, Computer City and Incredible Universe chains.
Between 1,000 and 1,400 workers will lose their jobs.
``In today’s business world we’ll be re-engineering forever, but clearly this puts the focus on our core strengths ... and really should enable us to increase earnings over time and better deploy our assets,″ said John Roach, chairman and chief executive officer of the Fort Worth-based company, the largest electronics retailer.
The company will take an $86 million charge against earnings for costs related to the closings.
Tandy also said it has sold or agreed to sell its credit card portfolios and most repair service contracts, and increased its planned stock buyback to 12.5 million shares.
Late Tuesday, the company announced that its treasurer, Dwain Hughes, had been appointed chief financial officer. Hughes succeeds William Bousquette, who is resigning to become chief financial officer of Texaco Inc.
The store closings include all 173 Video Concepts, which the company said have become unprofitable due to smaller margins on televisions and computers. Also closing are 40 of 46 mall-based McDuff stores and 20 of 47 McDuff Supercenters.
Tandy has been restructuring for two years, selling its manufacturing operations and overhauling its retail units, including expanding the superstores and taking steps to emphasize Radio Shack’s customer service.
The company now operates 6,600 Radio Shacks, 69 Computer City SuperCenters and nine Incredible Universe stores.
Tandy stock was up 25 cents at $50.25 on the New York Stock Exchange late Tuesday afternoon.
Rauscher Pierce Refsnes Inc. analyst Dennis Van Zelfden called the moves ``quite positive″ and said they contributed to his decision to raise his 1995 earnings estimate for Tandy by 30 cents, to $3.80. The gain on the sales will offset the loss on the store closings, he said.
The mall-based stores Video Concepts and McDuffs were losing money because they were too small and didn’t have enough products, Van Zelfden said.
``They’re just not big enough anymore to adequately retail consumer electronics and computers,″ he said.
In details of the other moves, Tandy said it expects to gain some $36 million from the sale of its Computer City and Incredible Universe credit card portfolios to SPS Transaction Services Inc., a majority-owned subsidiary of Dean Witter, Discover & Co.
The company also has agreed to sell SPS its remaining credit card portfolios early this year, subject to regulatory approval. The moves have brought Tandy some $85 million in cash, and the company said it will get another $625 million in 1995.
In addition, the company expects to make some $50 million from the sale of most of its service contracts to American Bankers Insurance Co. and will continue to market service contracts for American Bankers.
Tandy said it will use some of the proceeds to increase its share buyback authorization from 7.5 million to 12.5 million. Some 5 million shares have already been purchased, the company said.
Tandy said it expects all the changes except the share repurchase to be recorded in the December 1994 quarter and shouldn’t change the company’s earnings outlook for that quarter or calendar year.