Luskin's to close its last 12 stores Competition tumbles Balt.-area retailer after 48 years

September 27, 1996|By Liz Bowie and Timothy J. Mullaney | Liz Bowie and Timothy J. Mullaney,SUN STAFF

Luskin's Inc., the appliance store that was started by a couple of guys who followed ice trucks around to find out who needed refrigerators and grew into a large regional business, succumbed yesterday to competition from nationwide appliance and electronics retailers.

Luskin's announced it had decided to give up after 48 years and close its 12 remaining stores in the Baltimore-Washington area.

Once, "The Cheapest Guy in Town" was a household slogan in Baltimore, but the company took a financial tumble after going public in the 1980s, and appeared to be struggling with competition and consumer complaints of false advertising.

Typically, there was no major corporate announcement or explanation of its impending demise -- only an advertisement in The Sun for a going-out-of-business sale. Company president Cary Luskin said in a brief interview yesterday that the family was tired of working six or seven days a week, 12 hours a day.

"I don't care to live that way anymore," he said.

Luskin said he expects to sell the remaining inventories and close the doors for good within a month, but he said much would depend on how quickly the merchandise sold.

Luskin's colorful, ambitious founder, Jack Luskin, built the company into a chain with 29 stores in several states and hundreds of millions of dollars in revenues. But Luskin's leaves the industry as a relatively small player, dwarfed by Circuit City and Best Buys Inc., which have entered the market in the past decade.

The company will lay off 150 workers at its stores, but the Luskin family owns a significant amount of real estate, which they will rent out to other retailers for more money than the Luskin's stores paid, said Mark A. Millman, president of Millman Search Group, Inc., a national retail consulting firm. "They are going to make out very well," Millman said.

"After a half century, they came to realize that the chain wasn't profitable anymore," Millman said. "[Jack Luskin] is a businessman. He knows when to make a decision. He knows when to pull the plug."

While some competitors and customers mourned the loss of another local retailer, others commented that Luskin's had a checkered reputation for consumer service.

Luskin's was first convicted of false advertising in 1957, but a more serious charge came in 1981, when the Maryland Attorney General's Consumer Protection Division charged it with selling used items as new and advertising items that were not available for sale, a practice known as "bait and switch." The case was settled in 1985 when the company agreed to pay a $290,000 fine, but continued to deny the charges.

The state is still battling the company, saying it made false

statements in advertising "free airfare" to consumers who purchased more than $200 worth of products. The Attorney General's office won a lawsuit in May 1994, but the company has appealed. That appeal is still pending.

The company was found to be making misleading statements because consumers had to purchase a product and then spend about $1,400 before they received the "free" airfare. Luskin's had been ordered to pay restitution to consumers who were misled. As many as 10,000 consumers might have to be paid "airfare to Hawaii," said John Nethercut, assistant attorney general for the Consumer Protection Division.

"No loss -- that's the way I feel about it," Baltimore resident Sharon Jones said of the closing. "I have a long memory of some of their devious sales plans and the court action against them."

Other customers thought more warmly of Luskin's, as though it were a hometown kid who made good. Signs of that affection remained evident yesterday.

"I grew up with Luskin's," said Jeannie Marcus, a former Baltimorean who lives in Aspen, Colo. "I identified with their name, and they always stood behind their product."

But signs of the chain's long, slow decline were apparent in conversations with customers outside Luskin's Towson store and with shoppers at the competing Circuit City store in Lutherville. Consumers described Luskin's stores as dirty, poorly stocked and staffed by people who often didn't keep their promises.

Even yesterday, hoping to capitalize on advertising promising up to 30 percent off, Jones was disappointed. She said she wasn't surprised to hear of the chain's demise. "The thing I wanted was nowhere near 30 percent off," she said, adding that she was offered a microwave oven at a 10 percent discount. "There's a lot of competition these days among appliance stores and you can only go so far."

Steven Skinner of Perry Hall carried a dehumidifier out of Luskin's yesterday, but said he doesn't shop there much any more. He'll miss the chain mostly because it helped keep its competitors on the ball, he said.

Two weeks ago, Luskin's announced it would close most of its stores in the Washington area, but denied that any of the Baltimore area stores would shut down. So, the suddenness of the announcement surprised some competitors.

Harvey B. Cummins, president of Cummins Appliance Co. in Pikesville, said he sensed Luskin's was losing market share a couple years ago. "Their stores were showing signs of neglect," he said.

Cary Luskin would not provide financial information about the company, which was delisted by Nasdaq in 1990, five years after its initial public offering. But the loss of the retailer was not hard to predict in a market that has become increasingly competitive. Two years ago, Best Buy Inc. moved into the area, opening stores in direct competition with both Circuit City and Luskin's.

"It is just a sign of the times in the industry," said Steven F. Marascia, an analyst with Branch Cabell & Co. "Consumers are very cost-conscious. They don't have loyalty to a particular company but to a particular price."

Pub Date: 9/27/96

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