The future of the audiobook-only bookstore chain Earful of Books was extremely murky as PW went to press last week. Messages on the answering machines at all corporate-owned stores said the outlets were "permanently closed," although a number of franchise stores continued to operate.
Peggy Lively, owner of the Arlington, Tex., Earful franchise, told PW, "We haven't gotten any word on what is going on. I understand the corporate stores in Texas are closed. We sometimes shared inventory with them as a courtesy, but we have our own accounts and our own separate computer system, so we're not really connected to them. Everybody's waiting to see how this will affect us and how we move on."
Several calls to Earful's corporate offices have not been returned, and the company's Web site was closed down early last week.
Earful's troubles first surfaced in the company's year-end filing with the SEC, in which its outside auditors reported that because of the chain's precarious financial position there were "substantial doubts" about the company's ability to survive. The company, which has never been profitable, had negative cash flow in the year and an accumulated deficit of $9.7 million as of December 31, 2001; it was also in default on certain bank loans. The filing also noted that company founder and president Paul Rush has relinquished his day-to-day responsibilities, and the company is being run by Russell Grigsby as CEO and Myron Sappington as chief financial officer.
In 2001, the company lost $4.6 million on revenues of $1.1 million. Earful attributed the poor results to "a significant decrease" in franchise revenue (to $25,000) and lower merchandise sales.
