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Harvey Q1 Sales Up 5.8%, Comps Off

3/20/2003 08:23:00 AM Eastern

Lyndhurst, N.J. - Despite the weak economic environment, specialty retailer Harvey Electronics posted a 5.8 percent increase in sales during its fiscal first quarter, hitting $13.1 million, up from $12.4 million in the year-ago period.

Net income for the first quarter, ended Feb.1, increased about 7 percent, to $420,643, up from $390,448 in the same three months the previous year. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), climbed to $977,000 in the first quarter, compared with the year-earlier EBITDA of $959,000. Comparable-store sales, however, slipped 1.2 percent, compared with the first quarter a year ago.

'Harvey's sales results for the first quarter of fiscal 2003 continued to be strong despite a weak economic environment, particularly in the New York region,' said Franklin Karp, president.

'Our results compared favorably with other reporting retailers in our industry and retailing in general. The slight decline in comparable store sales resulted from slower retail traffic during the holiday shopping season,' he said.

Karp singled out Harvey's gross profit margin, which he calls, 'already one of the strongest in the industry,' for its continued improvement in the first quarter. Gross profit margin for the three months climbed 80 basis points, to 40.1 percent, up from 39.3 percent year-on-year.

Increased margin and profitability from Harvey's newest location in Eatontown, N.J. and its newest branded Bang & Olufsen store in Greenwich, Conn. - as these units continued to mature - have helped to improve the chain's overall results of operations in the first quarter.

Harvey's profitable custom installation business continues to increase its share of revenue, accounting for 47 percent of net sales in the first quarter, up from 44 percent of net sales in the same three months last year. Custom installation sales of both equipment and labor increased about 12 percent in the first quarter, reaching $6.1 million, compared with $5.5 million year over year.

'In conjunction with out positive sales and gross profit margins, we continued to diligently control our expenses,' said Karp. Harvey's selling, general and administrative expenses increased by only $110,000, or 2.6 percent, in the first quarter, he said, compared with the same period a year earlier.