Tweeter to shutter remaining stores

Canton-based electronics chain has found it hard to rebound from bankruptcy

Sales of flat-panel televisions, like these displayed last year at the Tweeter store on Boylston Street in Boston, provided a boost to electronics retailers in recent years. But over the past year, sales of high-end TVs have slowed. (Stephan Savoia/Associated Press/File 2007)

Pink, blue, and yellow "Everything on sale" and "Nothing held back" signs plastered on the windows of the Tweeter shop on Boylston Street signal the end of the struggling electronics chain that is preparing to close in the next four to six weeks, according to store employees.

Hudson Capital Partners and Tiger Capital Group are planning to liquidate the merchandise at the company's 94 stores. Already, Tweeter's distribution centers and headquarters in Canton are shutting down. Tweeter, which opened its first shop next to Boston University in 1972, will stop its high-end installation services on Nov. 14, said employees at six Massachusetts shops who requested anonymity because they are not authorized to speak on behalf of the company.

The planned liquidation of Tweeter comes just over a year after the company filed for bankruptcy protection with about $165 million in debt. Tweeter's assets were purchased by the New York investment firm Schultze Asset Management in July 2007 for $38 million and the firm continued to run the chain. But deteriorating economic conditions and stiffening competition undermined attempts to save the electronics retailer, analysts say. According to an Oct. 20 filing in US Bankruptcy Court, Tweeter listed about $40 million in losses.

"They underestimated the difficulty of turning around the business, given the market dynamics," said Andy Hargreaves, a consumer electronics analyst with Pacific Crest Securities, a technology investment firm in Portland, Ore.

Schultze Asset Management declined to discuss the matter. Hudson Capital Partners in Newton confirmed the liquidation. Tiger Capital Group did not return calls seeking comment.

The final unraveling of Tweeter comes as the electronics industry continues to founder, with Circuit City revealing plans yesterday to close 155 stores (none in Massachusetts) and cut 17 percent of its domestic workforce. Electronics retailers have confronted huge price drops and a slowdown in the flat-panel television business that had helped the industry surge in recent years. Analysts say business is down at least 15 percent this year for some high-end electronics merchants.

It's a dramatic fall for Tweeter, which had cultivated a reputation in the early years as a mecca for people seeking high-end stereo equipment, from direct-drive turntables to pre-amps to acoustic suspension speakers. Over the past three decades, Tweeter became the go-to retailer for early electronics adopters and those seeking custom, upscale home entertainment systems, earning numerous awards along the way. At one point, Tweeter had more than 150 stores and 2,400 employees in at least 18 states, as well as high-profile naming rights, such as the former Tweeter Center in Mansfield (now renamed Comcast Center).

But Tweeter's position was weakened as mass merchants like Best Buy and Circuit City focused on installation and customized home entertainment products, and discounters such as Wal-Mart began carrying high-end electronics. In recent years, Tweeter attempted to expand its playground-store concept, which allows potential buyers to see how products work in situations that simulate their homes.

But the strategy was insufficient, analysts say.

Since spring 2007, Tweeter has shuttered more than a third of its stores, leaving it with just over 90 shops, mainly on the East Coast. The chain cut most of its mass marketing efforts this summer in a move to save money. Last month, Tweeter chief executive George Granoff was replaced with an outside restructuring officer.

Already, the clearance sales are underway. A 46-inch, flat-panel LCD television featured in the Boylston Street shop's window was slashed from $2,899 to $1,688. Inside, however, most of the products were discounted 10 percent, including luxury stereos, GPS navigating systems, and other flat-panel televisions. Analysts expect sales to accelerate when the outside liquidators take control.

The deals were not big enough to lure Vanessa Spilke, a retired Boston resident, inside the store. As she stopped in front of Tweeter's window on Boylston Street, Spilke explained that she used to shop at Tweeter stores but now does most of her electronics buying online. And these days, she's doing very little shopping at all.

"The discounts would have to be truly exceptional for us to think it was worth it to buy anything in these tough economic times," Spilke said. "If it's not food or clothing, we're not buying anything - period."

Globe correspondent Erich Schwartzel contributed to this story. Jenn Abelson can be reached at abelson@globe.com.