Good Guys Anticipates Lower Q3 Loss

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San Francisco -The Good Guys expects to post a loss for the third quarter that is substantially lower than the $8.1 million loss racked up in third-quarter 1999. With this anticipated loss, however, the retailer said it no longer expects to be profitable for fiscal 2000. Good Guys will issue third-quarter financial results on July 25.

A new in-store structure and an enhanced advertising campaign at Good Guys accounted for a 4 percent increase in sales for continuing categories and a 3 percent boost in comp-store sales for continuing categories during the quarter ended June 30, compared to the same three months last year.

"While we have made tremendous progress over the past nine months, and the third quarter in particular, we have adjusted our expectations for the year to fully account for the initial disruption of the in-store reorganization and the impact of a more promotional sales effort," said chairman/CEO Ron Unkefer.

Total sales for the third quarter were $195.9 million, about a 7 percent drop from the $210.5 million registered in the third quarter of 1999. Good Guys attributed the expected decline in overall sales to the elimination of low-margin PCs and home office products, and the de-emphasis of low-end items.

The retailer said sales for the quarter improved month-to-month, with June achieving the highest levels of gross margin and comp-store sales for continuing categories since 1994.

In addition, Good Guys said its renewed emphasis on mid- to high-end consumer entertainment electronics is expected to allow the company to achieve a gross margin of more than 28.5 percent for the third quarter, compared to 26 percent for the same period last year. Extended contract penetration and inventory turns on continuing categories also improved over last year's figures for the three months.

For the first nine months, total sales were $648.5 million, down about 10 percent from the $723.7 million recorded in the first nine months of last year. Comp-store sales for continuing categories remained flat for the period, while sales for continuing categories increased 1 percent. Good Guys, back on April 1, had reorganized in-store operations and merchandise categories to reduce costs by about $9 million annually and improve the level of service in its 79 stores.

In other Good Guys news, the retailer said it would lease space to Tower Records within two of its Las Vegas stores. The 3,000-square-foot "Tower 2" concept shops, which open next month, will occupy space previously devoted to computers and will offer digital A/V software.


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