FORT WORTH, Texas - Tandy Corp. said today it will close all of its Video Concepts and most McDuff mall stores in a restructuring as it focuses on its Radio Shack, Computer City and Incredible Universe stores.
Tandy, one of the nation's largest retailers of consumer electronics, said it will take a charge of $86 million against earnings to close the 213 stores.
Fort Worth-based Tandy has two Video Concept stores in the Seattle area.
The company also said it has sold or agreed to sell its credit-card portfolios and most repair-service contracts and has increased its planned stock buyback to 12.5 million shares.
"Tandy Corp. has taken a number of steps in the continuing re-engineering and restructuring of its assets to enhance shareholder value and our future earnings potential," said John Roach, Tandy's chairman and chief executive.
The company has been restructuring for two years, since it announced it would spin off its manufacturing operations and overhaul its retail units. It operates 6,600 Radio Shack stores, 69 Computer City SuperCenters and nine Incredible Universe stores.
Tandy said it plans to close the Video Concept stores because reduced margins on sales of big-screen television and computers have made them unprofitable. The company also said it will discontinue 20 McDuff Supercenters, including all in the Houston market, to stem losses and possibly open the market for an Incredible Universe store.
In other moves, Tandy said it expects to gain $36 million from the sale of its Computer City and Incredible Universe credit-card portfolios to SPS Transaction Services Inc. The company also has agreed to sell SPS its remaining credit-card portfolios early this year, subject to regulatory approval. The moves have brought Tandy $85 million in cash, and the company said it will get another $625 million in 1995.
In addition, Tandy expects to make $50 million from the sale of most of its service contracts to American Bankers Insurance Co. and will continue to market service contracts for American Bankers.
Tandy said it will use some of the proceeds to increase its share buyback authorization to 12.5 million from the 7.5 million previously announced. Five million shares have already been purchased, the company said.
Tandy said it expects all the changes except the share repurchase to be recorded in the December 1994 quarter and shouldn't change the company's profit outlook for that quarter or calendar year.
The company earned $96.8 million on revenue of $4.1 billion during 1993.