Mixed Results for Tweeter Group
The most recent quarterly total included $5.1 million in "non-cash compensation charges." Removing that from the calculation, Tweeter's quarterly loss would be $2.2 million, a small improvement over the previous year. The company sustained a $6 million increase in corporate expenses during the quarter, according to reports issued in early May. Tweeter's revenue has been gaining steadily since last summer's slump. For the first half of the year, sales totaled $444.5 million, a rise from the previous year's $431.6 million, but net income dropped severely to $551,000 from $2.7 million. Operating income was similarly proportioned at $1.4 million and $5.7 million for the two six-month periods respectively.
Tweeter's custom installation division continues to do well for the company, accounting for 3.5% of total revenue. Company executives believe that percentage can grow to more than 10%, with the potential to hit $100 million annually by the time the retailer reaches $1 billion in gross sales. Despite temporary setbacks, Tweeter believes the future is bright for A/V retailing. During the first week of May, the chain announced plans to acquire the NOW! AudioVideo stores in North Carolina and Tennessee. The deal should be consummated this summer at a rumored price of $4 million. The six-store NOW! AudioVideo operation does an annual business of approximately $21 million.
The acquisition is the first for Tweeter Group in about two years. During the market peak of the late 1990s, Tweeter expanded rapidly, buying up smaller successful retail chains in many areas of the country. Mentioning that the price was right for NOW! AudioVideo, CFO Joe McGuire told reporters that Tweeter is positioned to return to acquiring smaller well-run companies. Many Tweeter operations, such as HiFi Buys in Atlanta, retain their original names. The NOW! buyout will close around July 1.