A bitter sound at Tweeter

The owner of Triangle-born audio-video chain is broke

The demise of the Triangle's three Tweeter stores -- part of a company-wide liquidation of the 94-store chain -- marks a sad end to an electronics retailer whose local roots go back more than three decades.

Last week the Massachusetts-based chain filed for bankruptcy and started liquidating its merchandise. The stores will close on a staggered basis as inventory is depleted. All of the stores will shut down by Dec. 31, said Andrew D'Amico, vice president and general counsel.

"We had a precipitous dip in sales directly related to the credit crisis in September," D'Amico said. "It put us in a position where we couldn't continue to meet our obligations. It really hit us like a ton of bricks."

The ailing economy has other retailers reeling too.

Housewares chain Linens 'n Things is going out of business, shutting seven Triangle stores. On Monday, Tweeter rival Circuit City filed for bankruptcy, but it plans to continue operating while it restructures.

Tweeter moved into the Triangle in 2004 when it acquired Hillsborough-based Now AudioVideo, which had six stores plus a warehouse, for about $4 million.

Now AudioVideo was founded in 1972 by Ann and Richard Shachtman. They started a mail-order business and opened their first store, Stereo Sound, two years later.

Ann Shachtman became a well-known figure in this market, thanks to her TV commercials that highlighted the stores' product lineup and focus on customer service.

The Shachtmans couldn't be reached for comment Thursday.

The closure of the Triangle's three Tweeter stores -- in Cary, Durham and Raleigh -- will put about 30 employees out of work, D'Amico said.

But Eric Jacobs, mobile manager at the company's Raleigh store, said he isn't worried about the ailing job market.

"Most of the people who work for Tweeter will find other jobs," he said. "They had the best people, the best training, the best knowledge, the best products. I can survive anywhere."

Tweeter first ran into into trouble last year. First, in March, it announced plans to close a third of its stores in the wake of disappointing holiday sales and cut-throat price competition on big-screen TVs. Then, in June, it filed for bankruptcy court protection.

Since then the chain was making progress, cutting costs and anticipating healthy holiday sales, until it hit a wall in September when the economy crumbled, D'Amico said. That led to the company's second bankruptcy filing.

"We explored all the options to keep the chain going," including selling the entire chain, he said. "But at that point in time, we were in quite a bit of distress.

"We're all losing our jobs," D'Amico added. "It is devastating."

Tweeter suffered because the products they sold had become "commoditized," said IDC analyst Eric Haruki. "They really had no point of differentiation."

Adding to Tweeter's woes was that fact that "they were not competitive on price," Haruki said. "They rarely had any sales."

Tweeter aspired to play in the extreme high-end of the market, but lacked the expertise to compete effectively with specialty retailers that do a lot of hand-holding, he added.

That's where Audio Advice, on Glenwood Avenue in Raleigh, competes.

The store sells custom-installed home theater systems ranging in price from $12,000 to $100,000, as well as audio systems that cost tens of thousands of dollars.

"This year looks like it is going to be our best year in the history of the company," said Scott Newnam, Audio Advice's president.

On Thursday evening Audio Advice celebrated its 30th anniversary with a party.

(Bloomberg News contributed to this report.)