Due to consumer demand for new digital technologies, Harvey Electronics reported its most profitable quarter since the retailer resumed active public trading in 1998.
For the quarter ending January 29, Harvey reported sales of $9.85 million, a 54% increase from $3.45 million in the same quarter last year and nearly half (46%) of annual sales for all of 1999. Comparable-store sales were equally strong during the first quarter, with an increase of approximately $2.55 million, or 40%, over the same period last year.
The retailer's quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 80% to about $882,000, compared to approximately $489,000 for the previous year.
The company's pretax income for the first quarter increased by 89% to $700,382, compared to pretax income of $370,670 for the same quarter last year.
"Our outstanding results in the first quarter are an accurate reflection of the substantial investments we have made in infrastructure, store expansion, staff training and consumer marketing," said president Franklin Karp. "Our aggressive new advertising campaign and strong consumer demand for the exciting new digital technologies that we sell have driven the company to unprecedented levels of sales and profitability."
Karp said the company saw strong sales performances from new New York stores in Mt. Kisco and Greenvale, and its branded Bang & Olufsen store in lower Manhattan, as well as positive results from product offerings on eBay.
"The results of the second quarter to date have been encouraging," he added. "The percentage increase in sales to date is comparable to the increases recorded in the first quarter, as sales of HDTV, DVD, plasma flat-screen televisions and custom home theaters continue to grow.
"We are also committed to expanding our Internet presence and are in the process of developing a viable e-commerce strategy for Harvey in the tri-state area, which will further strengthen our name, sales, profitability and shareholder value."
Harvey's net income increased 33% to $440,382 for the first quarter of fiscal 2000, compared to $330,670 for the same quarter last year. Included in net income for the quarter was $350,000 of net advertising expense, versus only $30,000 in the 1999 period. This increased advertising expense included $120,000 to produce the company's first television commercial, which was a major component of the new and successful advertising campaign.
The company's gross profit margin for the first quarter of fiscal 2000 remained strong at 39%, compared to 39.5% for the same period last year. The slight decrease in the gross profit margin was due primarily to the increased sale of video products, which typically have lower gross margins than audio products. However, sales of the new digital video products do yield higher margins than commodity analog televisions and VCRs.