Tweeter demonstrates how not to handle liquidation
As if your company shutting right before the holidays weren't bad enough.
Regional electronics dealer Tweeter, scheduled to close its doors December 7, on Tuesday suddenly closed down all its stores. Six hundred employees at 70 stores were fired immediately. Many employees are still owed back pay, and some customers are still owed merchandise that has already been paid for, according to The Boston Globe, which cites five unnamed store managers and executives.
According to the Globe:
The employees, including roughly 150 in Massachusetts, are still owed at least one week's pay, vacation time, and hundreds of thousands of dollars in bonuses that were promised as part of the liquidation sale, said the managers and executives who declined to be named because they are still owed money. Customers are unable to pick up merchandise they had already purchased and the liquidators handling the closing also have not been paid. Meanwhile, there is roughly $14 million worth of goods left in the locked stores.
The Globe's sources say that while Tweeter's owner, Schultze Asset Management, paid off the company's largest creditor, Wells Fargo, it didn't want to continue covering the costs of shutting down the business. So Schultze locked the doors five days early and told managers not to come to work anymore.
The Hartford Courant also reports that customers were sold warranties after the company had already declared bankruptcy, and that merchandise preordered and prepaid before the bankruptcy has still not been delivered to customers.
It's not exactly normal for companies currently in liquidation to just shut down, particularly when they still hold inventory worth any value. Tweeter isn't talking, other than to say "things will work themselves out."
If the worst complaint about the Circuit City liquidation is that the discounts aren't all that great, the Tweeter situation certainly offers some timely perspective.
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica.
Power to the small business man.
"For many years, I have been concerned about the growing credit bubble. It was obvious to me that it was unsustainable and that an inevitable day of reckoning would come. To protect our customers, our employees, and my family from the disastrous consequences of a financial meltdown, I positioned Crutchfield to withstand the worst. We became very frugal with how we spent money. We did not pay outlandish executive salaries and bonuses. We did not build fancy facilities. We did not expand our retail store operations. And we did not buy other companies. Instead, we worked extremely hard to improve how we serve our customers, while we managed every aspect of our business with excellence. Furthermore, we paid off all of our debt and accumulated cash reserves."
From http://www.crutchfield.com/mediarelations/20081026-BillLetter.html
If you were planning on stopping by a local Tweeter store this weekend to find one last bargain before the chain closed it doors on Sunday, don?t bother. Despite public announcements and rather gaudy in-store posters counting down the days to the December 7th closing, Tweeter?s owner decided to abruptly shut down everything this morning (Tuesday, December 2nd).
Store managers and employees who arrived to open the 60-some remaining stores (12 or so in PA, NJ and Delaware) were informed of the surprising announcement by phone or email. They were told they had 15 minutes to gather personal belongs and vacate the premises. Some, I?m told, did so under the supervision of local police.
Others, like me, received phone calls and simply told not to come to work. We were fired.
Reportedly ? but I can?t confirm it ? Schultze Asset Management, the owners of Tweeter, filed Chapter 7 Bankruptcy this morning. (The company filed for Chapter 11 in early November at the beginning of its liquidation effort.) The potential repercussions, I?m told, are no final paychecks for employees, no severance, vacation pay or promised bonus for those who agreed to stay until the stores closed.
There is an irony in this situation, and I use that word euphemistically.
Tweeter and its local predecessor, Bryn Mawr Stereo, built its once-strong reputation on exceptional customer service, encouraging and training its sales people to build strong and trusting relationships with customers ? and to go the extra mile. Those of us who did ? and there are many I work(ed) with who are far better at it than me ? learned the benefit of working that way. It paid off, both monetarily (in what we earned), and it ?paid? bonuses professionally/personally in the long-term relationships and even friendships developed with customers. For some of my longer-tenured colleagues, those relationships have lasted a decade or more.
The ?irony? is that as we asked for and earned the trust and confidence of our customers, we also gave it willingly to our employer. When we were told that changes in policy, structure or operations were for the long-term benefit of the company, we accepted the explanations. Sure, we questioned many of the actions, but the response was convincing ? if now obviously insincere.
The perfect vision of hindsight now easily outlines the steps to lead to Tweeter?s demise ? internal/management missteps, external influences of technology/product changes, diminishing profit margins and overall profitability, and those myriad things we lump together and call ?the economy?. But the analysis of the rise and fall of Tweeter is a conversation for another day.
The question of the day, to me at least, is that of trust. What do we expect ? what should we expect of our employers and management? At what point in the past weeks did they cross the line and betray our trust? Why did they mislead us, lie to us?
Or, do they owe us an answer to those questions that at all?
I can?t argue with the fundamental goal of a company to turn a profit. The bigger the better, right? Nor would I expect any company to do anything that would negatively affect its bottom line.
If a store doesn?t turn a profit ? or meet even revenue expectations, of course, it is no longer of value to its owners and/or stockholders.
And, if a company is draining its resources and failing to provide a return on investment, then no one can reasonably deny the right of those who have staked it to cut their losses.
Let?s be honest. All of us were ultimately in this business for the money. We are (or were) sales people because it paid our bills ? sometimes more. If it wasn?t financially rewarding, we wouldn?t be doing this! It is ? or was ? fun. And I am ? or was ? good at it!
Sure, I am upset to be suddenly unemployed (if only unemployed a few days earlier than I expected to be). And, yes, I have been trying to find my next ?opportunity? with all vigilance ? an unsuccessful quest to date. And if there is no final paycheck (and all the other stuff like severance and bonus), it will have a dramatic, potentially, devastating impact on me and my family.
But what most upsets me today is that my character has been compromised. I was asked to support a management team, my bosses and my owners and they have betrayed me. In my relationship with my customers, they made me a liar.
Call me naïve. Toss in a touch of unrealistic Pollyana-ism. I?m guilty.
Shame on me.
I know my situation and that of my colleagues is not unique. ?It happens,? as one friend told me, ?it happens almost every day.?
But today it happened to me.
And it really hurts.
And, oh yeah, I need a job.
John
Bucks County, PA
JohnHDTV@aol.com
Unfortunately, Magnolia ate their lunch. Best Buy had far inferior service, but the purchasing power from their mass market products meant Magnolia could always underprice Tweeter. In fact I know people who researched an HDTV with Tweeter's help, then saved a grand and bought from Best Buy.
Don't blame the shutdown fraud on Tweeter. Tweeter's management team was replaced with Shultze's in chapter 11, and I'm sure the original Tweeter owners feel terrible about how horribly their final customers and employees were treated.
A sorry end to a class act company.
Oh, where do we start. I would start with an industry who took all
the good products (exclusives) and ****** them out to big box
movers, yes, i know there are sales to achieve but what value are left
in those brands names? Lets start with Denon, Boston Acoustic, Klipsch,
Polk, Kef, Velodyne , Niles, Monster (total ******), Alpine, Eclipise(nice product nowadays)
Onkyo. I love theater in a box, good stuff !!!!
As for mr.crutchfield, screw him. Great he has a mail order catalog. Much face to face service
to help customers everyday. Glad I could answer the difference between plasma and lcd so they
could order it from Bill. Screw the mail order people including crutchfield....Long live Walmart
for my high end stereo needs....
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by gerry0081
May 7, 2009 10:40 PM PDT
- Ok so I have a 65inch mitsubishi dimond dlp. I have a 5 year waranty or had. So now that the bulb went out thats it???? What do I do???
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