Harvey Fiscal Q3 Profit Results Turn Black

Lyndhurst, N.J.— Energized by growing consumer demand for digital video products along with home theaters and related custom installation services, specialty retailer Harvey Electronics reported a return to the black in its fiscal third quarter.

Harvey, which specializes in custom installation of high quality home theater audio and video products in the New York metropolitan area, said net income for the three months, ended Aug. 2, hit $13,000, compared with a net loss of $80,923 in the year-ago period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) soared 60.3 percent in the third quarter, to $303,000, up from $189,000 in the same period in 2002. The company's pre-tax income for the same timeframe jumped nearly 119 percent, reaching $23,403, compared with a pre-tax loss of $125,923 year on year.

Sales for the nine-unit chain, as reported, increased 5.1 percent in the three months, hitting $10.1 million, up from $9.6 million in the same quarter a year ago.

Buoyed by what he cited as an "industry leading" gross profit margin of 41.2 percent in its third quarter, Harvey president Franklin Karp lauded his company's strong profit results. "This is particularly impressive and important, as Harvey has not generated a profit in a third quarter in recent memory, as the summer months are historically a slower retail period for us."

Expanding on the 5-percent-plus sales rise in the third quarter, Karp said, "We have also seen a strong rebound in consumer spending since our second quarter, which ended in April. Our August and September sales to date continue to outpace the prior year." Digital video, home theater products and custom installation continue to drive the business, he said.

Harvey's 41.2 percent third quarter gross profit margin increased 170 basis points above the 39.5 percent figure recorded in the year-ago three months. This improvement was primarily due to the continued growth and improving efficiencies in the retailer's custom installation business. At the same time, the chain said it also had become more proficient in selling higher margin extended warranties as well as furniture, cable, wire and other accessories.