Decision Expected Soon in Abt’s Bid to Buy Flanner’s Inventory

A decision on Abt Electronics’ bid to buy inventory from defunct Flanner’s Home Entertainment is expected in about a week, Abt General Manager Phil Hannon told us.

Chicago-based Abt entered a bid about 10 days ago after reviewing open box and packaged AV inventory at Flanner’s Brookfield, Wis., store, Hannon said. About 60 percent of the inventory is open box products like in-store display units with the remainder being packaged goods, Abt said. Abt will likely sell the open box gear through Abt’s store, while the packaged items could be sold online, Hannon said. Abt would support the products with warranties, he said. Absent court action -- Flanner’s hasn’t filed for bankruptcy -- the transfer of inventory could occur quickly, Hannon said.

Abt hasn’t disclosed the amount of its bid and Hannon declined comment. But the open box goods are valued at about 10 cents on the dollar, while packaged gear is worth closer to 50 cents, he said. Flanner’s shut its doors in late April ending a 119-year run after struggling financially for about 18 months, sources said. Vendors started cutting off shipments to Flanner’s about six months ago, industry sources said. Flanner’s lender First Milwaukee Bank sued the retailer in May in Waukesha County Circuit Court seeking to have a receiver appointed for the business. First Milwaukee was owed $811,213 of a $1.94 million loan that Flanner’s took out in 2006. Local attorney William Rameker was appointed receiver.

"It’s an opportunity if we can get the right price,” Hannon said. “When somebody says inventory you imagine brand new boxed inventory. That we found wasn’t the case here and it’s still questionable if it’s going to go through. If we can get around 10-20 cents on the dollar, the way its valued, we have a chance of getting a 100 percent return on it.” Abt is said to have bid on the inventory, in part, to provide funding for Flanner’s to repay creditors. Flanner’s CEO John Flanner’s wasn’t available for comment Monday.

In many ways, Flanner’s sharp focus on CE goods may partly have been its downfall, Hannon said. Since Flanner’s didn’t carry major appliances or PCs, it suffered as one-time margin-rich flat-screen TVs increasingly became commodity products, Hannon said.

"When things become a total commodity, good retail environments don’t necessarily do well,” Hannon said. “If you have a good, well-trained, sales force you need innovation to explain to customers and if vendors aren’t providing that you have an issue.” Although there was broad innovation in TVs several years ago with the advent of LCD and plasma models “after that there has been nothing to support anybody,” Hannon said.

While 3D TVs and Blu-ray players are “exciting,” the technology isn’t going to “drive anything in the near term,” Hannon said. “Where we're sitting right now it’s a cool thing for people to check out and look at, but it’s not going to the level of LEDs, LCDs and plasma TVs.”