Adray’s Closes 5th of 10 Stores, Discontinues Computer Sales

Faced with flagging sales and fierce competition in Southern California’s consumer electronics market, Adray’s has closed half its stores and stopped selling computers.

The company, a Southland appliance store operator for 30 years, closed its Van Nuys store last week, the fifth shuttered in the last 12 months.

The closings are part of a retrenchment designed to allow the company to concentrate on its more profitable stores, said Isaac Hakim, Adray’s chief executive.

“There’s a lot of uncertainty in the economy, and the market is soft in Los Angeles and nationwide,” Hakim said.

Adray’s tried to stimulate sales last year with such offers as 0% financing for 12 months. The incentives reduced the potential for sales in 1996 and cut deeply into profits, Hakim said. The need to keep pace with price-slashing by competitors, such as Best Buy, Circuit City and Good Guys, also hurt the company, he said.

Adray’s halted computer sales last month because it became difficult to sell them without markdowns, Hakim said. Adray’s continues to sell appliances, cellular telephones, televisions and compact disc players.

Hakim said that prices at the remaining stores will be competitive and that the consolidation will help the company focus on its core customers--professionals and operators of businesses.

Adray’s is reacting to increased competition in the low end of the consumer electronics market, said Bill Kaynor, an industry analyst at L.H. Alton & Co. in San Francisco.

“These companies have to cut prices to move products out the door,” he said. “When one company cuts prices, others follow. It’s like dominoes.”

Adray’s has been losing some sales to Best Buy, a fast-growing chain that entered the Southland market in 1994. Best Buy has 19 stores in Southern California and 251 stores nationwide. The company, based in suburban Minneapolis, surpassed Circuit City as the nation’s sales leader in 1995.

Size gives Best Buy an edge, said Ira Kalish, senior economist for the Los Angeles offices of Management Horizons, the retail consulting division of Price Waterhouse.

“Consumer electronics has become a price game, and it’s hard for a chain with five or 10 stores to compete with a company with the inventory buying power of hundreds of stores,” Kalish said.

Adray’s also closed stores in Torrance, Ventura, Lakewood and Canoga Park. The closely held company, which plans to move its headquarters from Van Nuys to Encino by June, operates five other stores in Southern California.