Tweeter Q1 Revenue Soars 55%, Comps Off 1.6%

By Jeff Malester On Jan 21 2002 - 8:00am

Mid- to high-end specialty A/V consumer electronics retailer Tweeter Home Entertainment Group enjoyed a 55 percent increase in revenue during its fiscal first quarter. The chain reported total revenue of $252 million during the three months ended Dec. 31, up from $162 million in the same quarter in 2000.

However, comp-store sales decreased by 1.6 percent for the three months, excluding the Sound Advice, Audio Video Systems and Big Screen City chains.

Tweeter's net income for its first quarter climbed nearly 38 percent, hitting $13.5 million, compared with $9.8 million in the year-ago period.

Due to the ongoing uncertain economic environment, Tweeter is planning for flat comp-store sales growth for its fiscal second quarter ending March 31. The chain anticipates revenue in the range of $190 million to $194 million for this three-month period.

"We are particularly pleased that we have been able to generate stable gross margins," said Jeff Stone, president/CEO.

"We launched our home installation strategy about two years ago. We did this with the knowledge that our video business, which carries lower margins than audio, would continue to increase due to digital/HDTV," Stone said. "This strategy was implemented as a hedge against the potential for lower overall product margins. We are seeing the results of our strategy this first fiscal quarter as our gross margin is up."

Tweeter's gross margin percentage during the first quarter climbed 60 basis points to 36.5 percent. Much of this improvement is due to an increase in labor revenue, compared with last year. Home installation labor revenue climbed to $3.7 million, or 2 percent of total revenue, up from 0.8 percent of total revenue in the same three months in 2000. This added 40 basis points to the gross margin, said Tweeter.

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