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Harvey Cuts Q2, First-Half Losses

6/15/2006 10:46:00 AM Eastern

Lyndhurst, N.J. — Harvey Electronics reported a reduced pretax and net loss for its second quarter and six months, ended April 29.

The New York metro-area chain posted a pretax loss of $76,000, compared with a pretax loss of $303,000 for the same quarter last year. Its net loss for the quarter was reduced to $51,000, from a net loss of $185,000 for the same quarter last year.

Harvey’s pretax loss for the six months, ended April 29, was $6,000, compared with pretax income of $151,000 for the same period last year. The net loss for the first six months of fiscal 2006 was $6,000, compared with net income of $89,000 for the same period last year.

As previously reported, for the second quarter of 2006, net sales aggregated $9,546,000, a decrease of $182,000 or 1.9 percent from the same quarter last year. Comp-store sales for the second quarter of fiscal 2006 decreased approximately $976,000, or 10 percent, from the same quarter last year.

For the six months, net sales were $20.9 million, a decrease of $882,000, or 4 percent, from the same period last year. Comp-store sales for the six months decreased about $2.3 million, or 10.5 percent, from the same period last year.

Franklin Karp, CEO/president commented, “While our results improved for the second quarter of fiscal 2006, as compared to the same quarter last year, sales and profitability have been negatively impacted by a slowdown of retail store traffic and continued shortages of flat panel product from key vendors.”

He added, “While we are not pleased with our results, we did report an increase in the company’s gross profit margin for the second quarter, which increased to 42.1 percent, from 41.6 percent for the same quarter last year. This was attributable to the 5 percent growth of our profitable custom installation business and the related 22 percent growth in higher margin labor revenue for the quarter. Despite the overall decline in sales, our custom installation business continues to grow. These sales represented over 67 percent of gross sales for the second quarter of fiscal 2006, as compared to 64 percent of gross sales for the same quarter last year.”

Joseph Calabrese, chief financial officer, said Harvey’s expenses for the second quarter and first half of fiscal 2006 declined 6.4 percent and 5.3 percent, respectively. But, “this decrease was offset by additional expenses relating to the company's new Bridgewater, N.J. store.”