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Sound Advice Reports Record 3rd-Quarter Net Sales

1/06/2001 02:00:00 AM Eastern

DANIA BEACH, FLA. -Record net sales and a 61 percent increase in income from operations highlighted third-quarter financial results at Sound Advice.

The upscale consumer electronics retailer said net sales for the three months ended Oct. 31 jumped 14 percent to $44.6 million, compared with $39.3 million in the year-ago period. Same-store sales were up 11 percent, while income from operations hit $2 million, compared with $1.3 million in the third quarter of last year.

Gross profit for the third quarter was up 17 percent to $16.4 million, from $14.1 million in the same period last year. Gross profit margin improved 100 basis points to 36.8 percent in the three months.

Third-quarter net income, however, declined about 37 percent to $609,000, compared with $959,000 in the same period last year.

The decline in net income resulted from a one-time charge of $574,000 associated with the termination of the company's secondary public offering and a provision for income taxes totaling $388,000 during the most recent quarter. A provision for income taxes was not required during the prior-year period.

"We are encouraged with the performance of our Sound Advice and Bang & Olufsen stores, and we expect continued year-over-year growth in revenues for the fourth quarter," said chairman/CEO Peter Beshouri.

"Demand for consumer electronics continues to benefit from the introduction of new products and features based upon digital technology," said Beshouri. "This trend should continue for the foreseeable future and is particularly evident in the upscale segment of the consumer electronics market."

Fueled by strong same-store sales growth, and healthy consumer demand for upscale electronics products and custom home-installation services, Sound Advice net sales for the nine months increased 9 percent to $129.1 million, compared with $118.4 million in the same period last year. Same-store sales rose 8 percent in the nine months.

Gross profit for the nine months climbed 12 percent to $46.4 million, compared with $41.6 million in the year-ago nine months. Income from operations reached $5.1 million, a 49 percent jump over the $3.5 million reported in the year-ago period.

Net income for the first nine months decreased by $487,000 to $1.9 million, down from $2.5 million the previous period. This reflects a provision for income taxes of $1.3 million and a one-time charge of $574,000 associated with the retailer's secondary public offering.