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Audiovox reported lower net sales and a modest profit for the quarter, ended May 31.
Net sales for the fiscal 2010 first quarter fell 17.1 percent to $119.8 million, from $144.6 million in the prior-year period. Net income rose to $500,000, compared with a net loss of $5.2 million in the same quarter last year.
Pat Lavelle, president and CEO, said the company was able to achieve a small profit due to cost reductions instituted last year and noted the company's margins increased while overhead was down.
Electronics sales, including car and general consumer electronics, fell 30.5 percent due to Audiovox's exit from flat-screen TV, portable GPS and GMRS two-way radios. Sales fell to $79 million, down from $113.7 million last year, also due to the recession's impact on automobile sales. Audiovox said, “Customer and vendor bankruptcies, the weak economy and lack of credit available to customers also adversely impacted sales.”
However, the company saw sales increases in select consumer electronics product lines and in satellite radio. Audiovox assumed the role of primary Sirius satellite-radio distributor (adding to its role as primary XM distributor) early in calendar 2009. Electronics represented nearly 70 percent of net sales in the quarter, compared with 78.7 percent a year ago.
Accessories sales increased 32.2 percent to $40.8 million from $30.9 million due mainly to the changeover from analog to digital TV, which favorably impacted digital antenna sales. Accessories represented 34.1 percent of net sales, compared with 21.3 percent for the year-ago period.
Gross margins increased by 350 basis points to 19.1 percent, up from 15.6 percent a year ago, due to a change in product mix that shifted toward RCA-branded products. This was partially offset by lower margins in mobile electronics impacted by lower automotive sales and by higher sales of satellite radio, which carry low margins. Also, last year, during the first quarter Audiovox marked down $2.9 million in inventory when it exited the portable GPS market.
Audiovox reported lower operating expenses by 25.4 percent of $22.7 million, compared with $30.4 million a year ago. As part of its efforts to reduce expenses, the company has reduced its headcount by 24 percent from its peak or from 1,035 to a current 781.
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