Ultimate's Fis. Q1 Sales Climb 10%
By Jeff Malester -- TWICE, 6/9/2003
Denver — Gains in large format and flat-panel televisions smoothed over disappointing business in home audio, video and home office, helping Ultimate Electronics register a 10 percent sales increase during its fiscal first quarter.
Revenue climbed to $155.7 million in the three months, ended April 30, up from $142.2 million in the year-ago period. Comp-store sales were off 8 percent in the first quarter.
However, with selling, general and administrative (SG&A) expenses soaring in the first quarter, and with gross profit margin flat, the retailer increased its net loss to $1.4 million, up from a net loss of $341,000 in the same quarter in 2002.
Ultimate, which anticipates increased consumer interest in the A/V categories following future acceptance of digital radio, server technology and recordable and multi-channel DVD, has decided to focus on these products and to fully support these new technologies. At the same time, the specialty retailer plans to eliminate core computer products from its offerings during the second and third quarters of this fiscal year.
Overall home office business in the first quarter accounted for 3 percent of Ultimate's sales, down from 4 percent in the same period the previous year. Television/DBS, by far the largest category, increased its percentage of overall sales from 38 percent to 42 percent in the first quarter, year-on-year. Audio dropped from 19 percent in last year's first quarter, to 18 percent this year. Video/DVD also lost a percentage point in the current three months, down to 15 percent, from 16 percent in the year-ago period. Mobile remained steady at 10 percent of sales, both in the current quarter and the same three months in 2002.
Ultimate recorded a 32.7 percent profit margin in the first three months, almost flat with the first quarter of a year ago. SG&A —hit by higher fixed expenses, mainly associated with 12 new store openings in the second half of last year as well as higher healthcare costs —reached 34.2 percent.
Ultimate, which operates 58 stores, plans to open seven new locations in the second half of 2003, one in the Minneapolis/St. Paul metro area, two in Austin, Texas; three in Kansas City, Mo. and one in Wichita, Kan.
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