Net income at Ultimate Electronics was cut by nearly half in the retailer's fiscal second quarter, down to $853,000, from $1.8 million in the year-ago period.
Revenue, however, climbed 21 percent, to $142 million in the second three months, as reported earlier. This compares with $117.6 million in the second quarter last year. Comp sales edged up 1 percent in the three months, as reported.
Comp-store sales growth in the current quarter continues to be positive at about 1 percent, while total sales growth for the first 24 days of the third quarter increased by 32 percent, compared with the same time frame last year. The opening of six stores in the Dallas-Fort Worth marketplace in early August heavily influenced the month's revenue climb. Sales for these stores have exceeded Ultimate's expectations.
Due to a slight shift in merchandise mix — away from audio products and to televisions — during the second quarter, ended July 31, gross margin fell 80 basis points, to 31.9 percent, compared with 32.7 percent in the second quarter of 2001. Despite the competitive pressures during the quarter, Ultimate realized a slight improvement in margin by category, but not to the extent originally planned.
Selling, general and administrative expenses (SG&A) rose 70 basis points, to 30.9 percent in the second quarter, compared with 30.2 percent year over year.
Second-quarter merchandise sales by category showed the largest group — television/DBS — accounted for 37 percent of the retailer's business, up from 35 percent in the same quarter last year. The audio share dropped to 18 percent in the second three months, down from 20 percent in the same period in 2001. Video/DVD came in at 16 percent in the second quarter, mobile 12 percent and home office 4 percent, all the same as last year's second three months.
For the six months, net income dropped to $2.6 million, down from $3.5 million in the same period in 2001. Sales climbed 22 percent in the period, reaching $284.2 million, up from $232.7 million in the same six months last year. Comp-store sales were up 1 percent for the six months, while gross margin slipped 50 basis points, to 31.3 percent. SG&A rose 50 basis points in the six months, reaching 29.8 percent.