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SPEC'S MUSIC, INC. ANNOUNCES FIVE-YEAR STRATEGIC PLAN; $23 MILLION EXPANSION PLANNED

 MIAMI, May 26 /PRNewswire/ -- In recognition of the dynamic changes occurring in the music retailing industry, Spec's Music, Inc. (NASDAQ: SPEK) has announced the completion of a strategic plan that will carry the company through the next five years.
 The plan, announced by Ann Spector Lieff, president and CEO of the Miami-based chain, includes a major expansion of the chain, new store and logo designs, organizational changes, and significant shifts in the company's merchandising mix and market coverage.
 "This industry is continually evolving," observed Lieff. "Consequently, we are implementing a plan to position Spec's for the challenges of today's heightened competition, and to meet the expectations of sophisticated consumers who demand variety, quality service, convenience and an entertaining shopping experience," she explained.
 Spec's, with 60 stores in Florida and Puerto Rico and estimated fiscal 1993 revenues of over $70 million, was founded in 1948 by Martin W. Spector with a single store in South Miami. Today it is the largest specialty music retailer in Florida's most important markets, including Miami/Fort Lauderdale, Tampa and the state's eastern Gold Coast.
 "We intend to concentrate our resources on being the dominant specialty retailer providing recorded music and music related products and services in each of the markets we're in," stated Lieff. To achieve this goal, the company is setting out on a $23 million expansion and store renovation program, and refocusing its marketing activities and product lines.
 Among the more immediate consequences of the company's restructuring program is the recent closing of four stores, and the decision not to renew the leases of several marginal stores as they expire. In addition, the company will continue to evaluate its video rental operations. "The video rental market has changed dramatically since we first opened the departments in select stores more than a decade ago," noted Lieff. "It's a mature market, and in locations where appropriate, we'll close video rental departments. In those instances the space previously devoted to video rentals will be allocated to expanding music product lines, sell-through video and music related merchandise," stated the company president.
 To further strengthen its market position, Spec's will initiate an expansion program that over the next five years will add as many as 50 new stores and change the look of approximately 30 existing ones. "We may enter new markets by acquisition, if a suitable established chain is located in a targeted region." She emphasized, however, that the company has no intention of entering, or staying in, any market in which Spec's cannot have a substantial presence.
 The new stores will include traditional mall and street locations, as well as 15,000-square-foot or larger "mega" stores. In addition, the company intends to participate in multiple destination centers that feature music, videos, books, entertainment such as multi-screen theaters and comedy clubs, gifts and boutique merchandise. A number of such sites are already under discussion in several markets.
 The design of the new and renovated stores will allow Spec's to provide customers with a unique shopping experience, explained Lieff. "While we're committed to maintaining a comprehensive selection in virtually all significant music categories, and assure 100 percent in- stock of new releases and hits, customers will find much more in the 'new' Spec's," she said. "It won't be just a new look. It will be a new experience."
 Most stores, for example, will feature listening posts where hit songs and new releases can be previewed. The company's larger stores will also have kiosks at which customers can search product listings. Special orders, which will be executed through an on-line network accessing 130,000 titles, as well as concert tickets and general questions will be handled at dedicated customer service centers.
 Because of the costs associated with abandoning certain assets in the renovation process and store closings, and the elimination of certain video departments, the company will be taking a one-time charge against its third-quarter earnings, according to Peter Blei, vice president and chief financial officer. Although the exact amount of this charge has not been definitively determined, Blei noted that management anticipates an after-tax charge of approximately $1.6 million.
 "The company's revenue and operating profits before the one-time charge will be at record levels for the quarter ended April 30," stated Blei. "But the charge is expected to result in a loss for the period," he said. "We expect, however, to report a profit for the full year that ends July 31." Blei, noting that Spec's is debt free, emphasized that the company's balance sheet remains very strong.
 Among the organizational changes to be instituted to facilitate the company's strategic plan is the addition of a new real estate director and the creation of two new corporate positions: a senior vice president of merchandising, and a director of marketing.
 While the major product categories in each store will continue to include Popular music, Jazz, Classical, Video, and Children, greater emphasis will be put on non-traditional merchandise. For example, special areas of the stores will be devoted to music accessories and to boutique merchandise such as apparel, books, posters, gifts and cards. This type of merchandise has been very popular in the company's existing stores, contributing increasingly to sales volume in those stores.
 Significantly, the company will be expanding its children's departments. "We intend to become a destination store for children's music and related merchandise," noted Lieff, who explained that this could include cartoon-based items, books on tape, comic books, trading cards, cartoons and children's classic movies. Similarly, with new stores successfully established in Puerto Rico, and a dominant presence in the South Florida market, the company will be expanding its Hispanic music departments as well.
 "As new music formats and delivery systems, such as laser discs, mini-discs, digital compact cassette, CDI and CD-ROM, or direct electronic transfer, become more important or established toward the close of this century, we'll be positioned to integrate them into our marketing mix," stated Lieff.
 "This is a customer-driven company. Ever since the first Spec's was opened 45 years ago, we've been responsive to the tastes and expectations of our customers. That's why we've evolved and changed over the decades as they've evolved and changed. And that's why we've been successful. It's also why we will continue to be successful," she said.
 -0- 5/26/93
 /CONTACT: Ann Lieff, president, 305-592-7288, ext. 330, or Peter Blei, chief financial officer, 305-592-7288, ext. 303, both of Spec's Music, Inc./
 (SPEK)


CO: Spec's Music, Inc. ST: Florida IN: REA SU:

AW-JB -- FL004 -- 2336 05/26/93 09:36 EDT
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Date:May 26, 1993
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