Lyndhurst, N.J. — Regional specialty retailer Harvey Electronics moved into the black during its fiscal fourth quarter, notching $748,242, compared to a year-ago loss of $98,368.
Net income for the quarter helped by an income tax benefit of $977,000, said Harvey.
Sales in the three months, ended last Oct. 30, increased 7.2 percent to $10.4 million, up from $9.7 million in the same quarter in 2003. Comp-store sales jumped 7.7 percent.
"The company experienced an increase in its overall video business in fiscal 2004, driven by the strong demand for flat-panel televisions," said Franklin Karp, president/CEO. The retailer also reported an increase in higher margin audio sales for the second, third and fourth quarters, with this trend continuing into the first quarter of fiscal 2005. "We believe these results validate our efforts to revitalize our higher margin audio business," said Karp.
But all is not rosy for Harvey’s current first quarter, with the company experiencing a slowdown in sales, particularly in January. "We do expect a decline in first-quarter 2005 comparable-store sales of between of between 3 percent and 3.5 percent, compared to last year," said Karp, who blamed competitive pressure, namely for video products, as well as extreme winter weather in the later part of January, for the impact on first quarter sales.
However, Karp said Harvey’s gross profit margin will remain strong in the first quarter, according to preliminary estimates. Significant sales increases of higher-margin audio business during the first quarter is a key factor, said the retailer, while its video business decreased due to price compression.
Gross profit margin increased to 41.1 percent for the fiscal year, from a year-ago 40.8 percent, despite the competitive pressures on video products, said Harvey. "This is very satisfying, as we believe our business plan, which includes our efforts to sell additional higher margin accessories, labor income, furniture, cable and extended warranties, has to date been successful," said Joseph Calabrese, Harvey’s chief financial officer.
Harvey expenses climbed about 3.8 percent in the 12 months, compared with 2003, with advertising layouts one of the prime reasons. The retailer said its increased marketing presence during 2004 led to $2.7 million in related expenses, compared with $2.5 million in 2003.
Custom installation services, including labor and equipment sales, continued to increase in 2004, and accounted for about 59 percent of net sales for the year, up from 56 percent in 2003.
For the 12 months, sales edged upward 1.6 percent, to $43.1 million, compared with $42.4 million the previous year, which included 53 weeks, or an additional week. Comp-store sales for the comparable 52 weeks increased about 4 percent year-on-year.
Net income for the 12 months rose to $1.3 million, up from $287,041 in the same period the prior year. Harvey registered a non-cash charge of $144,000 in the fourth quarter.