Another Record-Breaking Retail Sales Quarter

Retailers Ultimate Electronics, Sound Advice, Harvey Electronics and Good Guys have all reported strong sales for their most recent quarters, leading into the holiday shopping season. The only sour note was posted by Circuit City, which has stated that earnings are below expectations across all product categories.

Ultimate Electronics operates 34 stores, including 15 stores in Arizona, Idaho, Iowa, Nevada, New Mexico, Oklahoma, South Dakota, and Utah under the trade name Ultimate Electronics, 11 stores in Colorado under the trade name SoundTrack and eight stores in Minnesota under the trade name Audio King. The company states that sales for the third quarter, ended October 31, 2000, rose to $117.2 million, a 28% increase over last year and that comparable store sales were up 12% for the quarter. Gross margins also increased to 32.2%, compared to 30.4% for the prior year. Ultimate's Ed McEntire adds that "early fourth quarter results are showing same store sales trends comparable with the third quarter, and as a result, we are optimistic about the prospects for the balance of our year, although the important holiday selling season has just begun."

Although they dropped their planned IPO two weeks ago, Florida retailer Sound Advice says that third-quarter, same-store sales were up 11% from a year ago. Volatility in the financial markets and the company's stock price relative to other specialty electronics retailers were cited as reasons for the decision to terminate the stock offer. Sound Advice said the offering's termination will not affect any planned store openings for at least the next 12 months. Net sales for the third quarter, ended October 31, 2000, were reported to be $44.6 million, a 14% increase from $39.3 million for the same period last year.

Harvey Electronics, which operates six Harvey locations and two Bang & Olufsen showrooms on the east coast, also announced record total sales increases for the 12 months and fourth quarter ended October 28, 2000. Fourth-quarter net sales approximated $8.0 million, an increase of nearly $2.9 million or more than 56% from the same quarter last year. However, comparable store sales results were nearly identical for the same period. Harvey's Franklin Karp states that the sales results "are extremely gratifying, and validate the significant investments that we have made in new locations and the personnel and infrastructure to support them. We have previously announced that we have signed a lease for a new Harvey showroom in Eatontown, New Jersey, and we are actively searching for other suitable locations."

West Coast-based retailer Good Guys revealed positive sales results for its fourth quarter and fiscal year, which ended September 30, 2000. During the recent quarter, comparable store sales climbed 16.5% and total sales rose 10.6% to $212.1 million, compared to $191.9 million for the fourth quarter of fiscal 1999, marking the first double-digit sales increases the company has posted since 1994. Sales figures exclude computers and home office products, which the company discontinued during the fourth quarter of fiscal 1999 to sharpen its focus on mid- to high-end consumer entertainment electronics.

Finally, Circuit City's consumer electronics retailing operations recently revised earnings expectations based on lower than expected sales in the current quarter. Circuit's W. Alan McCollough explains that "although we had anticipated modest sales disruption related to our exit from the appliance business and the partial remodel of all stores, since the end of September sales have softened significantly in virtually all product categories, including those not affected by the remodeling process. If the sales pace we have seen over the last four weeks continues, we would instead anticipate a third quarter comparable store sales decline in the mid single-digit range and a loss from our Circuit City business in the range of five cents to ten cents per share."

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