Canton, Mass. - Faced with the challenges of current economic uncertainty, the Tweeter Home Entertainment Group reported an increase in revenue in its fiscal third quarter, but a decided decrease in income.
Total revenue for the third quarter climbed nearly 60 percent, hitting $175.3 million, up from $110 million in the year-ago period. Comp-store sales decreased 4.6 percent, excluding acquired chains.
Income from operations dropped to $678,000 in the third quarter, down from $3.8 million in the same three months in 2001. Net income for the three months came in at $103,000, down from the $2.5 million registered in the same quarter last year.
"As in the case in many businesses across America, the current environment is certainly challenging," said Jeffrey Stone, president/CEO. But looking closer to home, Stone said Tweeter "continues to focus on some of the core fundamentals of the business, like inventory management and distribution logistics, so that when the business turns around, we will be more operationally efficient than at any time in our history."
Tweeter announced late in July a staff reduction of 240 positions, or about 6 percent of its workforce. The high-end specialty audio/video retailer expects the reductions to have a net benefit of about $5.5 million on an annualized basis, and said it will take a charge in the current quarter of about $1.5 million for reduction costs.
On the bright side, Tweeter increased overall gross margin in the third quarter, ended June 30, gaining 90 basis points, to 36.2 percent, up from 35.3 percent in the same three months in 2001. The increase is attributed to an increase in product margins as well as a reduction in inventory shrink.
Selling expenses grew 260 basis points, to 28.8 percent in the third quarter, over the same period last year. General and administrative expenses rose 160 basis points, to 6.8 percent, over the third quarter of 2001.
For the nine months, total revenue increased to $613.1 million, up from $389.8 million year over year. Income from operations rose to $28.6 million, from $25 million in the same period the previous year. Net income remained about the same for both nine-month periods, rising to $16.2 million in the current nine months, from $16 million the previous year.
Looking ahead, Tweeter said it has revised its expectations for the quarter ending Sept. 30. Comp-store sales are expected to decline between 5 percent and 7 percent, with revenue in the range of $180 million to $183 million.