Audiovox Exits Navigation Market, Posts Q1 Loss
By Amy Gilroy -- TWICE, 7/21/2008
HAUPPAUGE, N.Y. — Audiovox will exit the portable navigation market due to competitive pricing, and reported a $5.2 million loss in its fiscal first-quarter.
Audiovox said, "Due to the highly competitive market, lower average selling prices and the continued focus on higher margin product lines, the company has exited the portable navigation business," according to a release. Audiovox added that it does not plan to exit any other categories at this time.
Net loss from continuing operations during the fiscal 2009 first quarter was approximately $5.2 million compared with net income of $100,000 in the fiscal 2008 first quarter.
Audiovox also announced higher net sales for the period ending May 31, but an operating loss of $7.9 million, due in part to $2.9 million in losses related to portable navigation.
Net sales increased 12.7 percent to $144.6 million compared with $128.3 million last year. The increase was due mainly to higher sales generated from acquisitions and select products.
Pat Lavelle, president/CEO, stated, "We entered the fiscal year knowing the overall economic environment would have a negative impact on our performance and this was accounted for in our internal projections. With the surge in crude oil and gas prices, the domestic economy worsened, particularly as it related to consumer confidence and purchasing. These factors have cut into our profit potential as our expenses were higher and we were not able to fully leverage our overhead with lower than expected sales volumes. We are hopeful that the situation will stabilize and are taking the necessary steps to bring this company back to profitability."
Electronics sales, which include both mobile and consumer electronics, were $113.7 million, up 19.7 percent from the year-ago period. Accessories sales were $30.9 million, down 7.2 percent for the quarter due to slower sales of consumer electronics, as a result of the economy, said Audiovox. Partially offsetting the decline were sales generated from the Technuity acquisition, which closed in November 2007 and were not included in fiscal 2008 results, the company added.
Electronics represented 78.7 percent of net sales for the quarter, compared with 74.1 percent for the year-ago period, and accessories represented 21.3 percent compared with 25.9 percent a year ago.
Gross margins declined to 15.6 percent, compared with 18.1 percent a year ago, due largely to Audiovox's decision to exit portable navigation. Margins were also impacted by higher freight charges and material costs, and higher field warehousing expenses.
"Irrespective of the global economic conditions, we still believe our sales will grow this year and that our gross margins will return to traditional levels," Lavelle said, citing plans to expand internationally.
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