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Good Guys Posts Profit

4/16/2003 08:43:00 AM Eastern

San Francisco - A combination of closing under-performing stores and reductions in Selling, General and Administrative expenses - to attain a lowered cost structure - has allowed Good Guys to report an annual profit for the first time in seven years.

For the 12 months, the retailer reported net income of $1.1 million, compared with a net loss of $40 million in the same period a year earlier.

In the fiscal fourth quarter, ended Feb. 28, Good Guys recorded net income of $11.2 million, compared with a net loss of $17.3 million in the year-ago period.

Fourth quarter sales at Good Guys reached $229.5 million, down about 11 percent from the $259.2 million reported in the first quarter of last year. The decrease reflects store closures and an 8 percent decline in comp-store sales. Comp-store sales for continuing product categories dropped 6 percent.

The retailer said it continues to experience strong growth in sales of digital products, including flat panel and high definition televisions. It also is enjoying growth in digital cameras, HD set-top boxes and wireless phones. Average transaction size, gross profit per transaction and items per transaction in the first quarter all increased year to year.

For the 12 months, sales at Good Guys hit $750 million, down about 7.5 percent from the $819.7 million reported in the prior year. The decrease reflects store closures and a comp-store decline of 5 percent.

Good Guys has closed eight under-performing stores since January 2002, recording an $18.1 million store-closure and impairment reserve for the fiscal year ending last Feb. 28.

Given the challenging economic environment, the retailer is currently budgeting for comp-store sales declines to continue through the first part of the year, which will negatively impact its first quarter financial performance.

'Good Guys' focus for fiscal 2004 will be on gross margin improvement and increasing customer loyalty through a differentiated shopping experience,' said Kenneth Weller, chairman/CEO.

'By optimizing gross margin return on investment, continuing to expand our unique selection of the latest in entertainment electronics, investing in our staff of trained product specialists and focusing on solution selling, Good Guys can leverage our lowered cost structure and position ourselves for future growth,' said Weller.