Canton, Mass. — Revenue at the Tweeter Home Entertainment Group essentially was flat in the retailer’s fiscal second quarter, coming in at $184.7 million, down 1 percent from the $185.8 million posted in the same three months last year.
To deal with its latest down quarter, Tweeter announced it will close 19 stores, a move that will cost the company between $25 million and $30 million, most of which will occur during the third quarter this year. Of this, about $9.7 million is non-cash charges. The retailer also said it intends to reduce its total workforce by about 6 percent as a result of the closings.
Operating loss for the second quarter, ended March 31, increased to $7.9 million, from $7 million in the same three months in 2004. As a percentage of revenue, operating loss from continuing operations was 4.3 percent for the three months, compared with 3.8 percent year-on-year. Comp-store sales dropped 4 percent. Joe McGuire, interim CEO, said sales were off plan for the quarter.
Net loss from continuing operations ballooned to $27.1 million, from $4.4 million in the same quarter a year earlier. This year’s net loss includes a non-cash impairment charge of $22.2 million.
“We did not achieve our internal plans for profitability for the quarter and fell about $2 million short of our internal RBT goal,” said McGuire, who was pleased with gross margin trends and the continued growth of the company’s service business. “By rationalizing our store base, we move much closer to a return to profitability.” The retailer had a 1.5 percentage point increase in gross margin in the quarter, but also a 4 percentage point increase in selling expenses.
For the six months, total revenue hit $446.7 million, up from $436.6 million. The retailer registered a net loss from continuing operations of $21. 9 million, compared with net income from continuing operations of $877,000 in the same period last year.
Tweeter moved into the red for the six months, recording a net loss of $22.4 million, compared with net income of $551,000 in the same six months the prior year.