advertisement
Mexican telephone and retail magnate Carlos Slim, in a rare defeat, will exit the U.S. consumer-electronics market, shutting the last 100 CompUSA stores after sinking about $2 billion into the business.
Stores will remain open through the end of the year under the supervision of Gordon Bros., a retail-store liquidator, which will also oversee a piecemeal sale of CompUSA, negotiating the sale of real estate and other assets. Two law firms were hired to represent creditors, CompUSA said.
- Video: Who is Carlos Slim?
"An orderly and expedited wind-down and asset sale process is the best option for CompUSA and its creditors," Bill Weinstein, a principal at Gordon Bros., said in a statement. Weinstein was named interim president of the firm.
CompUSA has not been recently profitable, industry executives said. The company did an estimated $4 billion in annual sales last year, but with the closure of more than half of its stores in February, sales were expected to shrink to about $1.5 billion this year.
Slim, the powerful chairman of Telefonos de Mexico (TMX, news, msgs) and operator of a string of retail businesses in Latin America, has long coveted a big name in the U.S. retail market. He took his first stake in the business in 1999 and expanded the business through acquisition. After taking a minority stake in the retailer, he later spent $800 million to take the company private.
In 2003, CompUSA acquired California consumer-electronics chain The Good Guys. In 1998, he purchased Computer City from Tandy.
The retailer has struggled for years, hurt first by competition from direct personal-computer sellers such as Dell Inc. (DELL, news, msgs) and more recently by intense competition in consumer electronics. Bigger rivals such as Best Buy (BBY, news, msgs) and Wal-Mart Stores (WMT, news, msgs) have been able to offer greater selection and lower prices for flat-panel televisions and other consumer-electronics gear.
More from MSN Money and The Wall Street Journal
Turnaround effort fails
As reported, CompUSA had been in discussions with rivals about selling parts of its retail holdings, and a spokesman for the new management says the talks are ongoing."Active discussions are under way to sell select stores in key markets as well as the company's highly-regarded technical services business," CompUSA said in its statement.
People familiar with the situation have said that CompUSA has been talking to TigerDirect, an arm of Systemax, a Port Washington, N.Y., marketer of PCs and electronics, with TigerDirect buying stores and the Internet operations of CompUSA.com. In addition, CompUSA has held talks with an Ohio company, Micro Electronics, about the sale of about 10 stores.
- Top Stocks blog: The latest on what's moving the market
In early 2003, Slim made an unsolicited $1.5 billion bid for Circuit City after accumulating about a 9.2% stake in the company. He later sold the shares after being rebuffed by the Circuit City board. Since then, he has pursued investments in retail outside the United States, recently opening the first Saks department store in Mexico City under a license with Saks.
In February, CompUSA announced plans to shutter 126 stores and accepted a cash infusion from U.S. Commercial, a unit of Slim's holding company, Grupo Carso. The money was intended to finance a turnaround effort that targeted small businesses and affluent consumers.
This article was reported and written by Gary McWilliams for The Wall Street Journal.
Rate this Article
High
