Luskin's Inc. has purchased Indianapolis-based Sound & Sight Inc., which owns and operates 11 stores in the Midwest, as part of its drive to become a bigger player in the increasingly competitive consumer-electronics industry.
The $1.2 million acquisition, which was announced yesterday, will bring the total of Luskin's stores to 53 in the mid-Atlantic states, Connecticut and the Midwest, where Luskin's already has a foothold under the Tokyo Shapiro name. It will add about $27 million in sales to the Baltimore-based chain, whose revenue last year totaled $90 million. It was unclear whether the purchase price included the assumption of any debt.
Luskin's move is part of a trend by consumer-electronics retailers to gobble up the smaller chains that are finding it increasingly difficult to compete with the larger, more aggressive retailers such as Circuit City Stores and Crazy Eddie Inc.
"There is a dramatic consolidation going on in the entire consumer-electronics industry," said Edward A. Weller, financial analyst withE. F. Hutton & Co. Inc. "There has been a dramatic increase in the number of vendors and the product available. The smaller stores can't compete with it; they are getting the starch beat out of them from the big stores, who can buy better and offer better prices."
Weller and other analysts said that was exactly the case with Sound & Sight, whose "Hi Fi Buys" and "Buyys" stores were facing stiff competition from large retailers in the areas in which they operate.
"We feel they are a very viable company," Chairman Jack Luskin said. Luskin acknowledged that Sound & Sight had some financial difficulties and, through an intermediary, had approached Luskin's to see if it was interested in buying the chain. Luskin's, with a history of buying troubled specialty retailers, made it known this summer that it was in the market for new stores when it sold $20 million worth of stock to the public. Of that amount, at least $4 million was slated for store expansion, with plans to add at least 26 stores.
"We will intelligently digest what we presently have" before making further acquisitions, Luskin said.
The going will not be easy, financial analysts predicted, as there is still stiff competition from other large retailers. Luskin "will have his hands full," Weller said.