Audiovox Outlines Distribution, Product Strategy
By Joseph Palenchar -- TWICE, 10/12/2011
Hauppauge, N.Y. - Audiovox expects to meet its full-year profit forecast by following through on multiple initiatives.
The initiatives include an increasing focus on higher-margin products and new distribution channels for select products. Combined with a bottom line tracking ahead of plan, Audiovox expects to meet its full-year profit forecasts even if holiday sales come in less than projected, executives said during an investors' conference call.
Margins
are running ahead of projection, and overhead is lower than expected, the
company said. Margins for the fiscal second quarter ending Aug. 31 rose 650
basis points to 27.7 percent, and first-half margins were up 600 basis points
to 27 percent.
"Irrespective
of the economy, we are on track to meet guidance," said president/CEO Pat Lavelle.
Retailers, he noted, "remain cautious in buying," but the company has been
shipping quantities as projected.
The
company also outlined the first of several products that it will launch in the
location-based services (LBS) market. The first product is the Audiovox Car
Connection Powered by Sprint, which will be shown at International CES for
first-quarter shipment to retailers. It plugs into a vehicle's OBD II (on-board
diagnostics) port to enable vehicle tracking, geo-fencing, speed notification,
and driver-scoring statistics for fleet and consumer users. For consumers, it
could also be used to deliver driving-habit information to insurance companies.
The device can also be used to prevent texting while a vehicle is in motion.
New
distribution channels for the company include hardware and home furnishings
chains for Acoustic Research wireless speakers. The retailers include Menards,
Lowes, True Value, and Bed Bath and Beyond.
Health-care
and eye-care retailers have been targeted with a non-medical personal sound
amplifier designed to enhance hearing in people with mild to moderate hearing
loss. RadioShack is already selling the device in 2,000 stores.
Wireless-carrier
stores are also a new channel, and they're getting headphones designed for the
iPhone and for Verizon's Droid-branded Android smartphones. Audiovox is selling
to the AT&T and Verizon Wireless stores.
The
company is also pursuing the hotel market with universal remotes.
Responding
to questions about Klipsch Group performance, Lavelle said Klipsch is running
ahead of last year's top-line numbers and that Klipsch margins in the fiscal
second quarter are "consistent with the plan put in place and with past
performance,' Lavelle said.
Audiovox
also said it identified further back-end synergies in such areas as warehousing,
freight, logistics and systems that it could make to further improve its bottom
line following the Klipsch acquisition earlier this year. The company "might
have further adjustments" in the next 18 months, said senior VP/chief financial
officer Michael Stoehr.
In
other matters:
-- Fulfillment
sales of satellite radios and sales of select mobile aftermarket products fell
in the second quarter because of supply issue related to Japan's tsunami, Jeremy
Stoehr, public relations assistant VP, said. He expects the shortage to be
overcome in the company's fiscal fourth quarter.
--Second-quarter
accessory sales, particularly those related to TVs, fell while accessory
margins grew more than 600 basis points as the company began to focus on higher
margin accessories.
--Mobile
electronics sales to automakers grew as new-car sales growth resumed and its
top customers posted year-over-year gains.
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