CANTON, MASS. -Tweeter Home Entertainment Group reported record earnings in the fourth quarter and fiscal year and credited the results to three factors: strong profitability because of its focus on new-technology product sales; relentless attention to its audio business, which delivers higher gross margins than video; and an ongoing commitment to educating its salespeople.
Net income for the fiscal fourth quarter ending Sept. 30 increased 67.4 percent to $3.5 million, compared with $2.1 million in the fourth quarter last year. Total revenue climbed 31.5 percent in the fourth quarter to $98.1 million, compared with $74.6 in the year-ago quarter. Comp-store sales were up 9.4 percent, excluding the United Audio Center chain.
Gross margins in the fourth quarter were up 120 basis points to 37.5 percent, compared with 36.3 percent in the year-ago three months.
Tweeter said the rise was due primarily to the increased sales of higher-margin products such as DVD players, high-end digital receivers, and digital camcorders and televisions. With greater sales volume, general and administrative expenses as a percent of revenue dropped 30 basis points to 5.2 percent in the fourth quarter, down from 5.5 percent in the same quarter in 1999.
Tweeter said it continues to see significant acceptance by consumers of digital-technology-based products. "There continues to be tremendous amounts of money invested by our manufacturers in digital technologies, and our customers' enthusiasm has never been greater for these products," said president/CEO Jeffrey Stone.
Digital camcorders accounted for 83.6 percent of Tweeter's camcorder sales in its fiscal year. Digital-ready projection TVs represented 59 percent of that business in 2000 and 32.6 percent in 1999, a 196 percent increase. Digital-tube TVs, introduced last June, accounted for 29.7 percent of that category's sales in the fourth fiscal quarter.
All digital products combined accounted for 18.8 percent of Tweeter's business in 1999 and grew 138 percent to 31.3 percent of sales in 2000, according to the retailer.
For the fiscal year, Tweeter's total sales jumped 43 percent to $404.7 million, compared with $283 million in 1999. Excluding the United Audio Center chain, comp-store sales for the 12 months increased 13.5 percent, compared with 1999. Net income was up 81.2 percent to $16.4 million, compared with $9.1 million in the previous year.
Tweeter said it expects capital spending in fiscal 2001 to be about $39 million. Of this amount, it expects to spend about $31 million on 21 new stores and nine relocations throughout all of its nameplates.
Tweeter operates 95 stores under the names Tweeter, Bryn Mawr Stereo & Video, HiFi Buys, United Audio and Douglas TV.