Tweeter to slash one-third of stores, 20 percent of workforce

Tweeter Home Entertainment Group said today it is planning to close about one-third of its stores and cut about 20 percent of its workforce as part of a major restructuring of the high-end electronics chain.

The struggling Canton company will shutter 49 out of 153 stores, including ones in Auburn, Brookline, Holyoke, and Saugus, and exit markets in California, Tennessee, Alabama, New York, and Georgia. The cuts will eliminate about 650 employees and shrink annual revenues to $545 million from about $735 million.

Tweeter chief executive Joe McGuire said the store closures were accelerated by the rapid decline in prices and the erosion of profit margins in the flat-panel and projection television market. In February, Tweeter reported poor first quarter earnings with sales at existing stores falling 10 percent. The bulk of the revenue decline came in the projection television category, which dropped $22 million from the previous year.

McGuire said the past holiday season was the last time Tweeter would compete in the entry-level television market.

"These closures will help us by getting us profitable and financially healthy," McGuire said. "We are exiting the poorest performing stores and regions."

Tweeter is also shutting down two large regional facilities that include distribution and training centers, as well as technical and human resources support.

Andy Hargreaves, an analyst with Pacific Crest Securities in Portland, Ore., the closures are somewhat surprising given that McGuire has previously resisted pressure to shut more stores because they were making money. But the falling prices and profits in the television market limited survival of many stores, he said.

"It was just a matter of time before they went negative so there's no point in holding on to those stores," Hargreaves said.