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Ultimate Electronics Q1 Net Income Flat

5/23/2002 09:14:00 AM Eastern

Denver - Accelerating positive sales trends in mobile electronics and in all installation services have joined previously reported growth in digital television to help Ultimate Electronics record a 23 percent in crease in sales during the retailer's fiscal first quarter.

Net income, however, was flat during the first three months, hitting $1.70 million, compared with $1.69 million in the same quarter in 2001. The company reported sales of $142.2 million for the period, up from $115.1 million in the year-ago first quarter. Comp-store sales were up 2 percent for the quarter

'Sales for the first 22 days of our second quarter continue to be encouraging, with total and comparable store sales growth slightly better than the first quarter,' said Ed McEntire, CEO.

Mobile video product unit sales increased 181 percent in the first quarter, ended April 30, year over year, and now account for 10 percent of Ultimate's overall mobile electronics business. Sales of mobile video products contributed to a 25 percent increase in the mobile electronics category.

Sales of installation services, including mobile electronics, home and digital broadcast service (DBS), grew over 35 percent in the first quarter, compared with the same period in 2001.

Growth in these higher margin categories has helped to partially offset margin pressure from sales of televisions and video products, said Ultimate. Overall, gross margin for the first quarter was 30.8 percent, a drop of 10 basis points from the 30.9 percent recorded in the year-ago three months.

Selling, general and administrative expenses in the first quarter increased to 28.7 percent, 30 basis points higher than the 28.4 percent recorded in the previous year's first three months.

Television/DBS continues to be Ultimate's largest category, with first-quarter merchandise sales accounting for 38 percent of the product pie, up from 35 percent in the first quarter of 2001.

First quarter merchandise sales in audio dropped to 19 percent, down from 20 percent the previous year.

Video/DVD also lost a percentage point in the three months, dropping to 16 percent of merchandise sales, compared with 17 percent year over year.

Mobile remained steady at a 10 percent share, while home office declined to 4 percent, compared with 5 percent in the first quarter of 2001. The Other category was stable at a 13 percent share, quarter to quarter.

Ultimate said store openings continue to be on plan, with a fifth store in the St. Louis market expected to open in early July. In August, the chain anticipates to open the Dallas/Ft. Worth, Tex. market with six stores.

The chain currently operates 46 stores in 11 states, including units under the SoundTrack and Audio King nameplates.