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Harvey Q1 Net Income Dips

Lyndhurst, N.J. — Harvey Electronics’ net income edged downward in the company’s fiscal first quarter, slipping to $273,945, compared with $350,288 in the same period a year ago.

Earlier, Harvey reported a 2.5 percent first-quarter decline in sales, down to $12.1 million, for the period ended Jan. 29, compared with a year-ago $12.4 million. Same-store sales declined 2.6 percent.

Despite the sales downturn, gross profit margin rose 5 percent in the first three months, reaching 42.2 percent. The climb was registered despite price compression on certain video products, and “validates our efforts in selling additional higher margin custom installation services, accessories and extended warranties, along with our higher end audio and home theater products,” said Franklin Karp, president/CEO.

Harvey reported a 3.9 percent year-over-year increase in expenses in the first quarter, reaching $170,000. These expenses climbed primarily because of additional advertising costs, payroll and payroll related costs, occupancy costs and truck expenses.

Advertising expenses jumped nearly 18 percent in the first quarter, compared with a year ago. This resulted in an additional net advertising expense of $120,000, reducing profitability. The additional expenditures, however, are expected to benefit the retailer’s overall campaign in the current fiscal year, as it migrates more toward its service initiatives.

Excluding the increase in net ad expense, Harvey’s pretax income for the first quarter was flat with pretax income reported in the same three months a year earlier. Including the expense, first quarter pretax income hit $453,945, down from $570,288 in the same three months the previous year.

Harvey reported it is working toward the move of its Greenwich, Conn.-based Bang and Olufsen store. This location’s operations will be consolidated with the renovated Harvey Greenwich store, a block away.