Incredible Universe comes to an end; final sales over by mid-March

Discount Store News, March 3, 1997 by Robert Scally

NATIONWIDE DSN REPORT -- The stars in the Incredible Universe are about to go out.

All 17 of Tandy's Incredible Universe stores should be sold or shut down by the middle of this month. IU stores are currently conducting liquidation sales and will remain open until all of the inventory is sold, Tandy spokeswoman Fran McGehee told DSN.

By mid-February the Incredible Universe store located just outside Atlanta was nearly stripped of merchandise. A large banner on the outside of the store announced that an inventory clearance was underway, and very little saleable merchandise remained inside.

A sales associate said that the store is slated to close March 10. but will probably be shuttered sooner than that.

But a recent visit to the Incredible Universe in San Diego found little sign of a liquidation sale in progress.

Tandy announced Dec. 30 1996, that Fry's had agreed to purchase six Incredible Universe stores in the Arlington, Texas, Dallas Phoenix; Portland, Ore., Sacramento, Calif.; and San Diego markets.

The six IU buildings themselves and associated land will be sold to limited partnerships that will lease the stores to Fry's.

A privately held company Fry's operates 10 consumer electronics stores in California, some as large as 150.000 sq. ft.

"The last thing that will happen is the name change," a sales associate in the San Diego store said. Other Incredible Universe sales associates in San Diego said they had been told the deal would close within the next few weeks and that the transition to Fry's would be seamless.

The move into stores as large as Incredible Universe's wouldn't be too much of a leap for Fry's, which already displays its merchandise in a style that calls to mind both warehouse stores and mainline discounters. Fry's stores also carry software, audio CDs, magazines and convenience foods.

Full-page advertisements for Incredible Universe have been running in the San Diego Union-Tribune with highly promotional prices on a very select number of loss-leader items. The newspaper advertisements did not mention that the chain is slated to go out of business.

McGehee said that talks were still underway for the sale of some of the stores, and at press time there was nothing new to report on the status of stores not already accounted for.

But it has been a relatively quiet ending for the once-dazzling concept. In four short years, Incredible Universe went from a fresh-faced retailing superstar to a money-losing black hole as demand for consumer electronics plummeted.

Incredible Universe also located huge stores in poor locations in several of its markets and suffered from price-cutting competition from specialty consumer electronics discounters, such as Dow Stereo in San Diego and Hi Fi Buys in Atlanta.

Signs of serious trouble for the IU division became evident last May when Tandy closed a 185,000-sq.-ft. Pineville, N.C., unit about six months after it opened.

Just six months earlier, Tandy chairman John Roach predicted that IU stores would be in every major market in the United States by the year 2000.

When the chain was launched in the fall of 1992, Roach said he thought the United States could accommodate up to 50 of the gigastores, generating total sales of $3 billion. In late 1995 Incredible Universe was projected to grow to 27 stores by the end of 1996.

Tandy lost $137.7 million for the fourth quarter of 1996 ended Dec. 31, compared to a profit of $86.5 million for the same quarter in 1995. The loss included $197.9 million in charges for the closing of IU, 18 Computer City stores and its McDuff's stores. Revenue for the fourth quarter declined 2% to $2.05 billion, compared with $2.08 billion a year earlier.

For the year ended Dec. 31 Tandy lost $97.7 million compared with a profit of $205.4 million for 1995. Revenue for 1996 was $2.02 billion, down from $2.07 billion for 1995.

Tandy in '97 will focus maximizing cash flow, repurchasing shares and making "major initiatives" at RadioShack and Computer City, Roach said.

Incredible Universe's dimming performance sapped a good deal of energy from the bottom line. Turning the lights out is Tandy's first attempt in what will be an involved operation to jolt its stock price.