Emerson Radio Posts Loss As Sales Plummet
By Doug Olenick -- TWICE, 9/1/2003
Parsippany, N.J. — Emerson Radio executives laid out a road map for turning around the company's ailing financial situation, which includes introducing flat-panel televisions, Nickelodeon-branded products and selling through drug store chains.
Emerson CFO Kenneth Corby said the company will soon start shipping plasma and LCD televisions, as well as a three-SKU line of Nickelodeon-branded products. He would not give any details on the company's upcoming flat-panel products.
On the retail front Emerson will enter the drug store channel for the first time, with deals struck at Eckerd, Walgreens and Longs drug store chains. Each of the chain's stores will carry up to three SKUs of Emerson-branded audio and the Nickelodeon products, Corby said.
The financial benefits from these changes would not be seen during the next quarter when Corby expects revenue to fall below what was generated last year. However, he did hold out hope that consumer's newly received tax refund checks could have a positive impact at some point on Emerson's bottom line.
Emerson chairman/CEO Geoffrey Jurick gave a litany of reasons for the company's fiscal first quarter 2004 $506,000 net loss and 44.3 percent sales decline, including lower margins and store closures by Kmart. However, he was upbeat that the changes, announced Aug. 13, would have a positive effect before the end of Emerson's fiscal year.
The first fiscal quarter, ended June 30, saw sales in Emerson Radio's CE segment fall to $31.6 million, down from $56.8 million during the same period in 2002. Emerson posted a $2.5 million profit in its first quarter last year. The company's sporting goods segment did make a $115,000 profit on sales of $25.9 million for the quarter, but this could not counter the CE segments impact, and the company as a whole lost $445,000 for the period.
"Our consumer electronics segment was impacted by the prolonged slowdown in consumer spending in our industry. Store closures by Kmart negatively affected revenues compared to last year's levels with fewer sell through locations for our products," Jurick said.
He also blamed reductions in inventory levels maintained by other large accounts, the Iraq War and SARS outbreak as negatively impacting business during the period.
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