On-Site — The Minilab Scene
Wolf, Ritz, Moto
Fuel Kodak vs. Fuji Battle
By Jerry Lansky
The U.S. Bankruptcy Court approved the sale of the assets of
Wolf Camera to Ritz Camera on September 20 for $84.7 million. The
deal was expected to close by Oct. 1. Chuck Wolf will become vice
chairman of Ritz. Additional Wolf stores and Alpharetta
headquarters may be closed.
Kodak did not back the deal. Asked why, Joe Diliberto, Kodak GM and Vice President, Photo Specialty, Consumer Imaging, said, "We are committed to do what is in the best interest of our shareholders." "we pursued other options to recover a part of our investment we incurred as part of the bankruptcy filing."
As to the new Ritz-Wolf combination, he said, "Ritz is a Kodak customer and we are always exploring new ways to work together with our customers, which we will do."
A Fuji spokesman had no comment on the court's decision.
The combat between Kodak and Fuji is like a
fight between two heavyweights — one in yellow trunks, the
other green. The only difference is that it doesn't stop at the
15th round. Along with the Energizer Bunny, it keeps going and
going. Some of the rounds are just skirmishes, others are
Two recent events have come together to escalate the conflict into the Thriller in Manila category.
One involves Moto Photo who opened the bidding doors for its paper business. The other is the still unresolved story of the June 21 Chapter 11 bankruptcy filing of Wolf Camera and the proposal to the court that Ritz Camera step in and take over the Wolf operation for $84.7 million. As I write this the Ritz offer is still before the court and there are no other suitors. By the time you read this, however, you will probably have learned from PMA Newsline the conclusion of the court's decision. It looks as if Cousin Dave Ritz might deliver the final coup de gr•ce to Cousin Chuck Wolf.
Race for #1
There is no point in getting into too much detail. You've read all about it from either Newsline or some other timely publication. Renee DeGross of The Atlanta Journal-Constitution, Wolf's home city newspaper, has done a great reporting job. I've drawn from some of her material here.
The bottom line is that Chuck Wolf openly acknowledged that his problems began when he decided to challenge Ritz for leadership in the photo specialty arena. He wanted more store locations than Ritz. He couldn't pass up the 450 Fox stores in 1998 from Kodak who was most anxious to get out of the retail business. That package, no doubt, set the stage for his future financial troubles. Hundreds of the Fox stores were soon closed as it became apparent they were under-performers. It was quickly apparent that Chuck went for the deal due to the quantity of stores - not quality. He said that in September, 1998 his firm went from 3,000 to 7,000 associates with the stroke of a pen. He acknowledged to me that he knew by the end of 1999 "we were in over our head."
Whatever the Fox deal was with Kodak it turned out to be not good enough for Chuck and not so good for Kodak either. Some exec probably got a plaque for getting rid of the Fox stores but Kodak ended up having to take $75 million in write -offs this summer and lead its best customer into financial ruin. Talk about shooting oneself in the foot.
When I first spoke to Chuck after the announcement of the bankruptcy filing I asked him if it were possible that he would get together with Ritz. He said he was "looking at every option and opportunity" and it was our "intent to go it alone."
At this writing the Wolf chain has been dwindled from a high of almost 800 stores to about 420 locations with about 60 of these in the Atlanta metro. Thirty eight Proex stores in the Minneapolis market remain the jewel of the Wolf crown as I understand they are strong contributors to the balance sheet.
A number of key folks have been severed along the way with thousands of soldiers who had manned the now-closed sites. If the Ritz deal goes through the large Wolf headquarters in Alpharetta will probably be shut down as operations are melded into the Ritz Beltsville, MD. facilities and more Wolf stores will be pared. An Atlanta warehouse operation will probably continue.
David Ritz called Chuck Wolf "a master salesman" who, in the event of the acquisition, would lead the firm's national sales operations. For Chuck it would be a return to a firm where he had been given his photo training by his uncle, Ed Ritz, and remained until 1974 when he broke away to go on his own. Other top Wolf execs are not so certain of their futures including Ted de Buhr who, after the filing, was elevated from executive VP to President and COO. Ted was previously president of Fox.
An Open Letter To The Atlanta Community
Perhaps you have heard the news that yesterday morning, Wolf Camera filed for Chapter 11 Bankruptcy Protection.