Lyndhurst, N.J. — Harvey Electronics’ fiscal 2006 first quarter net sales fell 5.8 percent to $11.4 million for the three months ended Jan. 28.
Comparable store sales for the period decreased approximately 10.9 percent from the same period last year.
Franklin Karp, president/CEO of the nine-store, New York metro area A/V specialty chain, attributed the downturn to weak audio sales and shortages of flat panel displays. But despite scarce supplies and video price declines, the company’s video business remained flat.
“Demand for flat panel televisions has increased and unit sales have surged 37 percent in the first quarter of 2006 as compared to the first quarter last year,” Karp said, due to the sale of larger size plasma and LCD televisions. “This continues to provide a service opportunity for the company as customers require custom installations of these televisions and related home theaters. While it is disappointing to sell more units without increasing revenue, the continued strong demand coupled with additional price compression should give the company the ability to attach higher margin audio components, labor, extended warranties, accessories and furniture to these video sales.”
Indeed, despite a slowdown in retail store traffic during the quarter, Harvey’s custom installation business “continued to be strong,” Karp reported.
Moreover, sales for the first three weeks of February “have been very strong and have exceeded our expectations and results from the same month last year,” Karp noted. He attributed the sales gains to additional flat panel product being made available from key video vendors, coupled with increased retail traffic.
In other news, Harvey announced a partnership with Cablevision Systems in which the chain will provide custom installation options for the cable provider’s digital cable customers at preferred rates. These services are being offered exclusively to Cablevision’ Interactive Optimum (iO) customers via Cablevision’s online Optimum store at www.optimumstore.com. “We are excited about this opportunity with Cablevision,” Karp said, “and believe it will benefit sales in fiscal 2006.”
Harvey’s On Demand Installation service includes on-wall installation of plasma or LCD televisions, regardless of where the unit was purchased. In addition, Harvey offers a “One Control” service, which will allow iO customers to consolidate remote controls for up to six different electronic devices into a single universal control.
“We believe custom installations from Harvey, the recognized leader in providing these professional services in our market, will be an appealing option for iO customers who have specialized needs, including the installation integration of high-definition home video and audio entertainment systems,” said Patricia Gottesman, Cablevision’s executive VP of product management and marketing. “Our Optimum-branded voice, video and high-speed Internet services are the most popular and highly rated in the nation, so it makes perfect sense to offer customers with specialized needs a seamless customer installation option from a top-rated partner like Harvey.”
Elsewhere, Karp said the company continues to “examine ways to reduce expenses, improve purchasing and inventory efficiencies, implement positive merchandising changes, while cultivating our profitable service offerings. We remain optimistic about fiscal 2006 and beyond. He added that Harvey’s new Bridgewater, N.J. store, opened in fiscal 2005, is “maturing nicely and is expected to contribute net store profitability for fiscal 2006.