New Initiatives Aimed at Streamlining Operations, Enhancing Customer Service
SAN FRANCISCO, March 18 /PRNewswire/ -- Good Guys (Nasdaq: GGUY), a
leading specialty retailer of consumer entertainment electronics, today
announced several store-level and corporate initiatives aimed at reducing
operational costs by an additional $9 million annually and enhancing customer
service throughout all 79 locations. The moves will lead to a one-time charge
during the current fiscal quarter, but are expected to bolster Good Guys'
efforts to return to profitability in fiscal 2000 and to increase earnings in
the years that follow.
"For the past several months, we have been concentrating on strengthening
our product differentiation and enhancing our financial position. Now it is
time to extend those efforts by introducing initiatives that have an immediate
impact on the store floor and the overall customer experience as well as our
financial performance," said Ronald A. Unkefer, founder, chairman and CEO.
"We fully expect to make our stores more profitable while providing higher
quality service to our customers."
The $9 million reduction in expenses announced today combined with the
$15 million reduction announced last year is expected to save the company
approximately $24 million annually.
In-Store Initiatives
Effective immediately, Good Guys is reorganizing its staffing structure
and merchandise categories to more effectively utilize its existing sales and
management team and lower store operating expenses:
-- The personal electronics department is being eliminated with the
majority of existing products being integrated into the audio, video
and mobile electronics departments to better showcase Good Guys' broad
product selection, provide more knowledgeable sales support and reduce
overhead. Many of the more experienced managers and salespeople will
be reassigned to open positions. However, approximately 300 positions,
primarily entry-level, will be eliminated with most full-time employees
receiving severance packages.
-- Cashiers have been introduced to handle basic transactions as well as
finance applications, service and returns, allowing sales counselors to
focus on assisting customers with product selections and improving
overall service. The new format will also enable customers to quickly
purchase basic products and accessories that do not require assistance
from sales counselors.
-- Department staffing and scheduling is being adjusted to better reflect
sales volume and in-store traffic, improving the level of service to
customers, eliminating over-staffing and increasing earning potential
for effective sales counselors.
-- Sales managers are being incentivised to participate in the sales
process and interact with customers, providing customers with more
experienced assistance and providing sales counselors with more
effective role models and training opportunities.
"It is imperative that our staffing and compensation structure is clearly
aligned with our business objectives," said Unkefer. "We will continue to
introduce measures that not only reduce costs, but provide value to our
customers, employees and shareholders."
Corporate Overhead Reductions
Good Guys also announced that it has eliminated its internal advertising
production department to leverage external expertise and resources to
strengthen its advertising and marketing efforts and reduce costs. The
company has outsourced its day-to-day advertising operations, including
newspaper advertising and direct mail, to Team Design, a San Francisco Bay
Area advertising agency with extensive experience in retail and consumer
electronics.
Additionally, in response to the exploding real estate market in the Bay
Area, Good Guys plans to consolidate its five-floor corporate headquarters to
two floors and sub-lease the remaining three floors. The profit from the
leasing arrangement is expected to nearly eliminate all remaining corporate
real estate costs.
Good Guys expects to incur a one-time charge for severance packages and
related expenses during the current quarter. These expenses, coupled with the
losses typically associated with the company's second quarter, are expected to
yield a substantial loss for the period. However, even when factoring in the
anticipated loss for the quarter and the lower sales levels typical in the
post-holiday season, Good Guys' business plan still projects a profitable
fiscal year.
Since introducing the company's initial business strategy for returning to
profitability last July, Good Guys has aggressively reduced operating costs,
eliminated unprofitable lines of business and shifted its product focus to
reflect its emphasis on mid- to high-end consumer entertainment electronics.
Currently, more than half of the products offered by Good Guys are not
available at the largest national chains and the company plans to increase
this differentiation to 75 percent or more by expanding its offerings of more
fully featured models and exclusive high-end brands.
"With our transformation into the CE retailer of choice for early adopters
and product-savvy consumers well under way, we must continue to evaluate every
aspect of our business to ensure that we are customer-driven and poised to
take advantage of the explosion in the digital and high-tech consumer
electronics industry," said Unkefer. "These new initiatives, coupled with the
aggressive changes we have implemented over the past two quarters, should
contribute significantly to our profitability for the foreseeable future."
Good Guys is a leading specialty retailer of consumer entertainment
electronics, offering a distinctive selection of fully featured digital and
high-tech products from more than 100 of the world's most respected
manufacturers. Founded in 1973, Good Guys currently operates 79 stores in
California, Nevada, Oregon and Washington.
To the extent this news release contains forward-looking statements, such
statements are subject to risks and uncertainties, including, but not limited
to, the successful implementation of the Company's current restructuring
program, increases in promotional activities of competitors, changes in
consumer buying attitudes, the presence or absence of new products or product
features in the Company's merchandise categories, changes in vendor support
for advertising and promotional programs, changes in the Company's merchandise
sales mix, and economic conditions.
CONTACT: Kristen M. Lark of The Good Guys, Inc., 214-220-2484, or
214-616-8755, or pr@goodguys.com.
SOURCE The Good Guys, Inc.
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http://www.thegoodguys.com
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http://www.prnewswire.com/comp/108403.html or fax,
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CONTACT:
Kristen M. Lark of The Good Guys, Inc.,
214-220-2484, or 214-616-8755, or pr@goodguys.com
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