Tower Records to Sell Off Inventory
The new owner of Tower Records will begin liquidating the music retailer’s 89 stores beginning today, just hours after a 29-hour-long bidding war.
“We’re going to have discounts for consumers to enjoy as they’ve never been seen before in the history of Tower Records,” said Andy Gumaer, president of Great American Group, a Los Angeles-based firm that won the auction and plans to liquidate the company.
Great American, which specializes in liquidation, paid $134.3 million for Tower -- $500,000 more than the bid by runner up Trans World Entertainment, which had hoped to keep some stores open. The bidding started Thursday morning and lasted through the night. The offer was approved Friday by a judge in Wilmington, Del.
Tower store managers who were contacted Friday had not been informed of the liquidation sale. “Really?” said one staff member answering the phone at Tower’s flagship store on the Sunset Strip. “I had no idea.”
Calls to Tower’s corporate offices were not returned.
Great American Group is deploying representatives to Tower’s 89 stores to facilitate the liquidation, which is expected to last about six weeks, said Gumaer, who used to shop at Tower. “It’s sad to see a dynasty like Tower be liquidated,” he said. “It’s emotional for all of us.”
The chain has been struggling for years. It filed for Chapter 11 reorganization in 2004, recovered, and then filed again in August 2006. At least three major music companies stopped shipping CDs to the chain in August, saying the retailer had not paid its bills. Tower owes creditors about $210 million.
Founded in Sacramento in 1960 by Russ Solomon, Tower isn’t the first beloved music store to close: Others such as Camelot Music, Musicland and Strawberries have closed as shoppers migrated to the Internet or to discount stores. Retail music sales fell 17% from 2000 to 2005, according to the Recording Industry Assn. of America.
But Tower’s demise is not a death knell for traditional ways of buying music: More than half of album purchases are from retail outlets, said Geoff Mayfield, an analyst at Billboard. “That would be an obituary that is too early to write.”