January 5, 2000 4:00 AM PST
Good Guys to spin off Web store
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The San Francisco-based retailer said GoodGuys.com will be open for business by the end of the second quarter this year. The Web store will sell high-end electronics products, targeting early adopters of technology goods, the company said.
"GoodGuys.com is a logical extension of our position as the provider of choice for customers who demand the most sophisticated high-tech consumer entertainment electronics," Good Guys chairman and chief executive Ron Unkefer said in a statement.
Good Guys becomes the latest in a string of traditional retailers attempting to cash in on the promise of e-tail sales. One of the first companies to do so, Barnesandnoble.com, completed a successful public offering last May, but has since seen its shares fall below their IPO price.
Toys 'R Us aborted plans to spin off its Web store as a separate unit, leaving partner Benchmark Capital in the lurch, but Benchmark later teamed up with upscale retailer Nordstrom on its Nordstrom.com spin off.
Good Guys' move comes as the company has struggled to right its financial ship. With 79 stores in California, Washington, Oregon and Nevada, the company has had net loses for each of the last four fiscal years. Good Guys lost $39 million on $916 million in sales in the year ended Sept. 30, 1999.
As a result of its continuing losses, Good Guys discontinued sales of increasingly low-margin computer and home office products last September. The losses also led to a management shakeup and layoffs. Last April, chief executive Robert A. Gunst and chief financial officer Dennis Carroll announced their resignations. Unkefer replaced Gunst in July.
Unkefer will serve as chairman of the new company. GoodGuys.com's headquarters will be in Portland, Ore., the company said. Good Guys will own 49.9 percent of GoodGuys.com, and will sell the remaining majority stake in the company to a collection of angel investors, venture capitalists and Good Guys management. The retailer did not specify any of the potential investors.