Citing the sales-depressing effect of liquidating discontinued products and a restructuring write-down, The Good Guys reported significantly higher losses on lower volume for the fiscal fourth quarter and year to September 30.
For the quarter, the San Francisco-based chain posted a net loss of $25.6 million, up from the year-earlier deficit of $6.75 million, while sales, at $191.9 million, declined 12.8%.
The loss for the quarter came after a $9.3 million charge related to personnel reduction and inventory write-offs. The full-year loss climbed to $39.3 million from last year’s $8.93 million.
Sales dipped 1.3% to $915.5 million. Same-store sales were down 4% for the quarter and 15% on the year, but excluding discontinued product, they were up 1% for the quarter and off 4% on the year.
“Results for the quarter were within expectations, given the steps we have taken in restructuring the company and the fact that we are in the early stages of implementing our strategy to return the company to profitability,” said Ronald Unkefer, the chain’s founder, who reassumed the CEO post July 1.
The quarter’s sales were “negatively impacted” by the liquidation of Good Guys’ entire inventory of PC and home office products, he said, but that has enabled the retailer to expand its “offering of higher-margin consumer entertainment electronics.”
“We’ve made tremendous progress in taking the steps necessary to return the company to profitability and to reposition Good Guys as the premier provider of leading-edge consumer entertainment electronics,” said Unkefer, noting that cost-cutting and restructuring are expected to save more than $15 million in the current fiscal year.
The chain’s product mix has been transformed. Among initiatives taken, said Unkefer, are “a new in-store category featuring Internet-related products and services,” including digital cable boxes, wireless phones, Internet phones and other non-PC Internet and e-mail access devices; an enhanced mobile electronics department; and action to “further differentiate its product offerings” from competing national chains.
More than 50% of its products are not available from either Best Buy or Circuit City, he said, and the goal is to boost that to 75% or more.
To boost holiday season traffic Good Guys has introduced a logo and features the tag line “It doesn’t get any gooder.”