West Chester, Pa. - Strong net income and improved gross margin on robust video game software sales highlighted the fiscal first quarter at specialty retailer Electronics Boutique.
The company reported pro forma net income of $1.6 million in the first quarter, compared with a net loss of $546,000 in the year-ago period. On a reported basis, net income reached $627,000 for the first three months, compared with a net loss of $1.4 million year over year.
Revenue for the first quarter, ended May 4, jumped 21 percent, to $217.7 million, up from $179.9 million in the same quarter last year. On a pro forma basis, revenue reached $211.5 million in the first three months, compared with $174.3 million in the year-ago first quarter.
Pro forma amounts exclude the results of operations and related expenses associated with Electronics Boutique's BB Kids and BC Sports Collectibles businesses in both the current and prior-year periods. The company previously announced its decision to close the BB Kids stores and sell the BC Sports Collectibles business.
"Our significant improvement in net income reflects the benefits of a growing installed base of Sony's PlayStation2, Nintendo's Game Boy Advance, Gamecube and Microsoft's Xbox," said Jeffrey Griffiths, president/CEO. "Year-over-year overall software sales are better than the total market, or 60.3 percent growth, compared with 31 percent for the industry."
Also, recent hardware price drops, an expanding selection of software titles and a growing base of customers across all age groups will further strengthen the retailer's financial position, according to Griffiths.
Comp-store sales for the first quarter increased 4.3 percent, excluding sales from BB Kids and BC Sports Collectibles.
Pro forma operating income increased to $2.1 million in the first quarter, up from an operating loss of $1.4 million the previous year, primarily due to higher gross margins on sales.
Pro forma selling, general and administrative expenses for the quarter, however, moved in the other direction, climbing to $48.5 million, compared with $37.2 million for the same period in 2001.
Electronics Boutique is expecting a second-quarter comp-sales increase of 8 percent. The retailer, which opened 26 new stores in the first quarter and converted 12 closed BB Kids stores to the Electronics Boutique format, plans to open a total of 200 new stores in the current fiscal year.