A sharply higher gross margin enabled Good Guys to triple fiscal first-quarter earnings, despite lower sales.
For the three months to December 31 the West Coast specialty retailer had a net of $5.62 million, up 240.1 percent from the year-earlier $1.65 million, while sales, at $262.2 million, slid 10.1 percent.
Although same-store sales were off 1 percent overall, excluding discontinued computer and home office products, they were up about 1 percent, Good Guys said.
The chain's gross margin jumped nearly six full points to 30 percent, which it said reflected the new "emphasis on higher-margin digital and high-tech consumer entertainment electronics."
CEO Ron Unkefer said "this was our first full quarter after implementing the major steps of our turnaround strategy, and the results validate its soundness." Same-store sales showed strong improvement in the quarter's final two months when a strong ad campaign was launched, he said, and "sales of higher-margin digital and high-tech products were especially brisk."
Given the success of changes that have revamped inventory, improved vendor relations and repositioned Good Guys as a high-tech consumer product source, "we're now ready to begin the next phase of our turnaround," Unkefer stated.
Priorities, he said, include improving same-store sales, reducing costs, further upgrading merchandise offerings and successfully launching the GoodGuys.com Internet site.
"We're excited about implementing the next phase of our turnaround," he said. "We continue to be confident that we will reach our profitability goals for fiscal 2000, [and] meet or exceed industry average earnings next year."