Lyndhurst, N.J. - Slower traffic, increased competition and tight supplies of flat panel TVs contributed to a 15.5 percent decline in fiscal third quarter sales at Harvey Electronics, the New York metro area A/V specialty chain.
Same store sales for the three months ended July 29 fell nearly 19 percent.
President/CEO Franklin Karp said he was "very disappointed" with the sales results and "very concerned" that the declines accelerated from the prior two quarters. Comparable store sales were particularly weak at the company's Eatontown, N.J., Greenvale, N.Y., and flagship Manhattan showrooms, and Harvey expects to show an increased loss in operations for the third quarter and nine month periods.
To remedy the situation, Karp is retooling Harvey's advertising efforts "to better reflect current market conditions and customer service demands." Harvey's marketing message had been inconsistent, he said, and contributed to the traffic and sales slowdown by failing to "cultivate retail traffic while promoting the company's service offerings."
Not all the news was glum. Harvey's custom installation business continued to grow as a percentage of sales — representing 64 percent of gross sales for the first nine months — and labor revenue rose by nearly 3 percent during the period, which is expected to bolster the company's gross profit margin. Karp is also seeing improving flat panel availability from core vendors, which should benefit Harvey's fourth quarter results, although he anticipates continued price compression within the category.
CFO Joseph Calabrese said the company has about $1.1 million in available bank financing, which should carry it through until a proposed $4 million equity infusion from an investment group led by Trinity Investment Partners is completed in October. The deal, if approved by shareholders, will give Harvey working capital and Trinity control of the chain.