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Ultimate Reports $1.8M Loss For Its 2nd Quarter

9/01/2003 02:00:00 AM Eastern

Faced with a fiscal second quarter decline in traffic, softened somewhat by growth of digital projection and flat-panel televisions, Ultimate Electronics reported a wider net loss in the three months, coming in at $1.8 million, compared with a loss of $929,000 in the year-ago period.

The retailer, which earlier reported a 9 percent increase in sales for its fiscal second quarter, to $154.2 million, up from $142 million in the second quarter of 2002 (TWICE, Aug. 18, p. 4), claimed a widening market share in television and other core categories. Yet, Ultimate, which said it has found overall industry performance to be a challenge, registered a 10 percent decline in comp-store sales in the second quarter, as reported earlier.

Gross profit margin in the second quarter, ended July 31 reached 33.9 percent, almost flat with the same period last year. Expenses reached 35.8 percent, up almost 1 percent from last year.

Ultimate remains on schedule to open seven new stores in the next three months and to "re-grand open" its remaining Audio King locations as Ultimate Electronics. This coincides with the opening of its seventh store in the Minneapolis/St. Paul market.

Ultimate said it plans to substantially complete its exit from the computer category in the third quarter, resetting its stores with products expected to increase store traffic — namely Playstation, portable electronics and cordless phones, and it plans to test DVD software.

In the six months, the retailer reported a net loss of $3.2 million, compared with a loss of $1.3 million in the year-ago period. The loss for the six months in 2002 includes a $1.6 million charge. Comp-store sales were down 9 percent in the six months, while overall sales increased 9 percent, to $309.9 million, up from $284.2 million year over year.

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