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Harvey Q2 Turns Red With $49K Loss

6/20/2003 02:10:00 PM Eastern

Lyndhurst, N.J. - Slow consumer spending prior to and during the Iraq war and the extreme winter weather, caused CE specialty retailer Harvey Electronics to post a $48,636 net loss for its fiscal second quarter.

This compares with net income of $90,609 in the year-ago period.

As reported, sales for the second quarter, ended May3, dipped about 3.5 percent, to $10 million, down from $10.4 million in the same three months last year (TWICE, June 9, p. 22). Comp-store sales also were off 3.5 percent in the period.

'Despite [the second quarter drop in sales and earnings], our comparable store sales for the first half were down only slightly, and compared favorably to other reporting consumer electronics specialty retailers in the industry,' said Franklin Karp, president.

Harvey did note its fiscal first half includes 27 weeks, compared with 26 weeks for the same period in 2002.

Harvey recorded a pre-tax loss for the second quarter of $85,636, compared with pre-tax income of $160,609 year-on-year. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) for the second quarter reached $199,000, compared with EBITDA of $477,000 in the same three months the previous year.

Sales for the six months edged upward 1.6 percent, reaching $23.1 million, compared with $22.8 million in the same period a year ago. Net income for the first half hit $372,007, down from net income of $481,057 year over year.

Karp said gross profit margin for the first half, 'already one of the highest in the industry,' increased 50 basis points, to 40 percent, compared with 39.5 percent in the same period a year ago.

Selling, general and administrative expenses increased by 3.3 percent, or about $260,000, in the first six months, and Karp said the retailer 'will continue to diligently control these expenses' in the third and fourth quarters.

'Our comparable sales results for the third quarter, to date, have somewhat improved and are now flat with the same quarter to date last year,' continued Karp. 'We remain optimistic in our outlook for the remainder of the year, as we anticipate consumer demand for new digital video products and related custom installation services to continue unabated.'

Harvey said it continues to focus on expanding its custom installation services, and is maintaining its planned advertising expenditures for the remainder of the year.