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SUN TV TO RISE AGAIN ELECTRONICS RETAILER PLANS TO REOPEN 3 AREA STORES

Sun Television and Appliances, Inc., which closed three Buffalo-area stores in early 1997 citing corporate fiscal problems, will return to the market in May.

In a surprising and perhaps unprecedented move, the Columbus, Ohio-based regional electronics retailer, confirmed Monday that it will reopen its three shuttered stores at S3701 McKinley Parkway in Blasdell, 1561 Niagara Falls Blvd. in Amherst and 2150 Walden Ave. in Cheektowaga.

R. Carter Pate, Sun's chief executive officer, said the company simply made a big mistake pulling out of the Buffalo market.

"Are we admitting we were wrong to leave Buffalo? Yes, we are," Pate said. "We left for all the wrong reasons, and after a lot of soul searching and market research, we're coming back for all the right reasons."

In January 1997, the financially struggling Sun announced it was closing a total of 10 underperforming stores, including the three Buffalo locations, as part of efforts to improve its bottom line.

Pate, a managing partner with Price Waterhouse Business Turnaround Services, who was brought in to oversee a major overhaul of the 51-store chain, said hindsight has shown the company "gave up too quickly" on Buffalo.

"The problems were with Sun, not with Buffalo," he said.

Pate's belief that Sun has strong potential for solid sales in the Buffalo area is bolstered by a recent consumer survey conducted by Scarborough Research. When the national consumer research firm asked Erie and Niagara county residents where they had shopped for or purchased personal electronics gear in the past 12 months, 25 percent indicated they'd visited Sun.

That 25 percent response, the most for any audio/video retailer, came despite the fact Sun's Buffalo-area stores were open for only two months last year.

Sun was also the top audio/video gear retailer in Scarborough's 1996 survey, with 32 percent of respondents saying they'd shopped at Sun.

The 1997 survey also ranked Sun the No. 3 destination for large appliance shopping, with 24 percent. Sun ranked No. 2 in 1996, with 30 percent of respondents sayings they'd shopped the stores.

Consumers ranked the chain No. 6 among places they'd gone to check out computers and software last year, at 22 percent, down from No. 2, at 38
percent one year earlier.

Sun's own research employing local consumer focus groups turned up more detailed positive responses about the departed company.

"We reached the conclusion that it is in our best interests to return to Buffalo. The market is clearly underserved in the electronics/appliance category and we believe we can be a dominant player for the long-term," Pate added.

The executive, who is part of an entirely new senior management team at Sun, said the company has made sweeping changes on many levels in the past year.

The changes that will be most evident to Sun shoppers involve customer service. The goal of the new approach to sales and service is embodied in Sun's new motto: "Sun Revolves Around You," according to Dennis May, Sun executive vice president and chief operating officer.

"We're a whole new Sun. We've done everything we can think of to making the entire shopping/purchasing experience as pleasant and efficient as possible," May said.

Sun has developed a new six-point consumer service program that includes automatic 30-day price guarantees on all purchases over $50; guaranteed delivery times, and "always in stock" product upgrades.

A revamped employee training program and management compensation tied to individual store ratings on customer service follow-through reinforce the new service focus.

The company is also spending what it termed "significant" money to update all three of its local 40,000-square-foot stores with big interior upgrades. The brighter, easier-to-navigate Sun stores feature softer color schemes, home theater rooms and computer training areas.

The chain has also altered its checkout counter systems to make paying a faster, hassle-free part of shopping. Pate said the cumulative effect of all these changes will be an even more competitive Sun chain.

"We're coming in with a whole new Sun and expect to attract attention from consumers and the competition," he said.

Overall, Sun's fiscal picture is starting to improve. In the third quarter of fiscal 1998 -- a period that ended Nov. 29, 1997 -- the company reported a net loss of $6.8 million, or 39 cents a share, including a one-time charge of $1.7 million.

The result compares with a loss of $4.1 million, or 23 cents per share in the prior year's quarter, which was aided by a $2.7 million one-time tax benefit.

Pate said despite the continuing red ink, Sun's fortunes are starting to rise again.

"The losses are getting smaller each quarter. Operating cash flow is improving. Things are turning around." he said.

Sun recently entered into an agreement to refinance its existing $100 million credit facility and obtain an additional $25 million loan, as part of its turnaround strategy.

The company has also embarked on a new growth strategy that will see the chain open smaller stores in smaller markets. Sun opened 10 of those outlets in the past year, with 17 more on the boards for 1998. The only new large market stores are the three reopened Buffalo stores.