CompUSA
buying rival
Computer City
'I don't known what's
By Peter Wagner
going to happen with the
store or the staff or
the building'
Star-BulletinJust days after announcing plans to open a 30,000 square-foot "SuperCenter" near its current location in Kakaako, Computer City is in limbo.
Tandy Corp., the retailer's parent company, today announced a $275 million deal to sell its chain of 100 Computer City stores to rival CompUSA Inc.
The merger would combine the two biggest U.S. personal computer retailers.
Told of the deal yesterday, Computer City employees here were taken by surprise.
"I don't know what's going to happen with the opening," said Tim Archangeli, Computer City general manager in Honolulu. "I don't known what's going to happen with the store or the staff or the building."
Archangeli last week outlined plans for the new store, now under construction, to open in September.
The project, across Kamakee Street from Computer City's current 15,000 square-foot store, was hailed by Victoria Ward Ltd. executives as a key part of plans to develop commercial property in the area.
The big Computer City "SuperCenter" was to compete with the just-opened CompUSA "Superstore" on Ala Moana and South Street, offering a similar array of goods and services.
Nathan Morton, chief executive and co-chairman of Computer City, today could not say how the buyout would affect either company's operations in Hawaii.
"I don't think any of those decisions have been made yet," he said. "We're really at the very early stages right now."
Morton said the deal came suddenly, after plans for the new store were well under way. "It was pretty quick," he said.
He noted the transaction will take about 90 days, during which Computer City will be open at its location across from Ward Centre.
CompUSA, meanwhile, today said it will close some stores but wouldn't give details until the transaction is complete.
Some of the closings might involve Computer City and some might be CompUSA, the company said.
This is the second time CompUSA and Tandy have talked about a combination. Negotiations in 1996 failed to result in a sale.
Dallas-based CompUSA, with 160 stores and sales of $4.6 billion last fiscal year, said the purchase will help it sell computers, software, accessories and training services to customers including consumers, businesses and government. Computer City, based in Fort Worth, Texas, had sales of $1.9 billion last year and now has about 100 stores.
The move will help CompUSA expand even as falling computer prices and slack demand hurt its profit. In April, the once high-flying chain scaled back its store expansion plans by as much as half, as it said fiscal third-quarter earnings fell 22 percent and that business would be soft for at least another quarter.
The sale ends Tandy's failed attempt to expand beyond its RadioShack chain.
The Fort Worth, Texas-based company said it will take a charge of $38 million to $43 million for the sale.
Tandy plans to focus on RadioShack, the largest U.S. chain of electronic stores.
CompUSA has been getting hurt on several fronts.
Lucrative sales of computers to businesses, which typically pay higher prices than consumers, slowed in the quarter. And more consumers and businesses are buying PCs over the Internet or telephone from companies like Dell Computer Corp. or Gateway 2000 Inc. Also, prices of computer equipment has been falling.
The purchase is subject to regulatory approval.
Star-Bulletin reporter Russ Lynch and
Bloomberg News contributed to this report.
