Electronics Retailer Tweeter Seeks Chapter 11 Protection

The Canton-based electronics retailer warned last month that a Chapter 11 filing was possible if it didn't obtain adequate financing, and the company filed Monday in bankruptcy court in Delaware.

"After considering a wide range of alternatives, it became clear that this course of action was a necessary and responsible step toward preserving Tweeter's viability as we address our financial challenges and work to secure our future," said Tweeter President and Chief Executive Joe McGuire.

McGuire said he was confident the 35-year-old chain "will emerge from this process as a stronger, more competitive organization that is well-positioned to respond to and succeed in the ever-changing consumer electronics industry."

The company also said Monday it would seek court approval to access $60 million in temporary financing that General Electric Capital Corp. has extended to Tweeter.

Tweeter recently reported a $35 million loss for the quarter ended March 31, and a 13 percent decline in sales at stores open at least a year. According to the AP, Tweeter in March announced to close 49 stores and lay off about 650 workers. A couple months earlier, the company said it would cut 70 jobs at its headquarters on the heels of disappointing sales. And the firm said last month it planned to pull out of naming-rights deals at four outdoor concert sites.

Tweeter suffered from poor holiday sales largely due to ongoing TV price cuts at larger competing chains such as Best Buy Co., Costco Wholesale Corp. and Wal-Mart Stores Inc. -- bigger rivals better able to absorb the price war's low profit margins. On the same note, Circuit City also isn’t doing too hot with their lay off of over 3,500 skilled employees. With these turn of events, one can’t help but wonder if we are doomed to getting our dose of hifi at chain department stores like Target or Walmart.

Tweeter’s disappointing holiday sales closed out a difficult 2006, when their shares lost more than half of their value despite a cost-cutting plan launched in 2005. McGuire has said the company hopes to target customers who want high-end audio and video systems and custom installation.

Tweeter is the owner of stores under the Tweeter, hiFi buys, Sound Advice and Showcase Home Entertainment names in New England, the Mid-Atlantic, Southeast, Texas, Chicago, Southern California, Phoenix and Las Vegas.