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Emerson Radio Posts Loss As Sales Plummet

8/13/2003 09:35:00 AM Eastern

Parsippany, N.J. - Emerson Radio executives cited a litany of reasons for the company’s first quarter 2004 $506,000 net loss and 44.3 percent sales decline, including lower margins and store closures by Kmart.

The quarter, ended June 30, saw sales in Emerson Radio’s CE segment fall to $31.6 million, down from $56.8 million during the same period in 202. This pushed the company into the red compared to the $2.5 million profit generated in the first quarter last year. Other problems during the quarter were was a 2 percent decrease in gross profit margins to 15.9 percent, declining sales of higher priced licensed products.

The company’s sporting good segment did make a $115,000 profit on sales of $25.9 million for the quarter, but this could not counter the CE segments impact and the company as a whole lost $445,000 for the period.

'Our consumer electronics segment was impacted by the prolonged slow down in consumer spending in our industry. Store closures by Kmart negatively affected revenues compared to last year’s levels with fewer sell through locations for our products,' said Geoffrey Jurick, Emerson’s chairman and CEO.

He also blamed reductions in inventory levels maintained by other large accounts, the Iraq War and SARS outbreak as negatively impacting business during the period. During the past quarter the company abandoned its Mary Kate and Ashley and NASCAR licensed product lines, which were just rolled out during the prior quarter.

Kenneth Corby, Emerson’s CFO, expects the next quarter’s revenues to fall below last years levels during the same period. However, he did hold out hope that consumer’s newly received tax refund checks could have a positive impact at some point on Emerson’s bottom line.

Other upcoming positive changes, Colby noted, are that the company will soon start shipping plasma and LCD televisions, as well as a three-SKU line of Nickelodeon Channel branded products. On the retail front Emerson will enter the drug store channel for the first time with products soon to be available at Eckerd, Walgreens and Longs drug store chains.

Corby was particularly upbeat about these new retailers saying it would greatly increase the brand’s storefront presence.