Bethpage, N.Y. - Following second quarter drops in both revenue and profit at its retail consumer electronics chain, The Wiz, parent Cablevision Systems said it will close 26 of its 42 stores, with only the most profitable surviving.
The Wiz, operated as part of Cablevision Systems' Cablevision NY Group, reported a 15.4 percent drop in net revenue for the second quarter, reaching $132.1 million, down from a pro forma $156.2 million in the year-ago period.
Consolidated adjusted operating cash flow at The Wiz, which is operating profit before depreciation and amortization, and excludes the effects of long-term incentive and stock plan income or expense - called AOCF by Cablevision - was posted at an AOCF deficit of $19.8 million for the second quarter. This figure was down 33.4 percent from a pro forma AOCF deficit of $14.8 million in the second quarter of 2001, due to lower revenue and lower gross margin.
'We will not continue to have the kind of losses [at The Wiz] seen in the second quarter,' said James Dolan, Cablevision president/CEO. 'We expect EBITA (Earnings Before Interest, Taxes, Depreciation and Amortization) at breakeven in 2003,' he said about the CE chain. 'If we can't achieve this, we'll have to go for more [stringent] measures,' said Dolan about beyond-closings plans for The Wiz, although he said he was confident current contraction would do the job.
Cablevision also said it would cut 1,100 jobs company-wide, or 7 percent of its workforce, in 2003. The cuts will not affect customer-service personnel, though Cablevision said the number of layoffs would rise when it closes The Wiz locations.
For the six months, net revenue at The Wiz decreased 11.5 percent, to $271 million, compared with a pro forma $307.1 million in the same six months last year.
Consolidated adjusted operating cash flow decreased 25.5 percent at The Wiz during the six months, down to an AOCF deficit of $40.4 million, compared with a pro forma AOCF deficit of $32.2 million in the same six months a year ago.
In the second quarter, Cablevision said it lost 10,000 subscribers, compared with the first quarter of this year, ending in March. Over the full year 2002, Cablevision has revised its subscriber forecast to a loss of between 1 percent and 1.5 percent, compared with the previous estimate of a subscriber gain of between 0.5 percent and 1 percent.
Total Cablevision NY Group revenue for the second quarter edged up 1.1 percent, to $910.7 million, compared with a pro forma $901 million in the year-ago second quarter.
Cablevision NY Group adjusted operating cash flow for the second quarter climbed 22.3 percent, to an AOCF gain of $248.9 million, up from pro forma AOCF income of $203.5 million in the same three months in 2001.
For the six months, the Cablevision NY Group revenue increased to $1.9 billion, up 3.1 percent from the pro forma $1.8 billion in the first six months of last year.
Operating cash flow for the six months at the Cablevision NY Group jumped 16.3 percent, to an AOCF gain of $432.9 million, compared with pro forma AOCF income of $372.3 million in the year-ago first six months.