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Tweeter’s Holiday Sales Slump

Canton, Mass. – Tweeter Home Entertainment Group lowered its outlook for its first fiscal quarter ending Dec. 31, 2002 in light of double-digit declines in December sales.

Comparable stores sales were down 15 percent for the first 21 days of the month, the company reported, and are off 10 percent for the current quarter through Dec. 21. Tweeter had previously predicted comp store gains of zero to 1 percent for the quarter.

‘We are just seeing less traffic across the board, as there appears to be less interest in the products we are selling this holiday season,’ said president/CEO Jeff Stone.

Stone said the weakness is consistent across the country for the chain, including its more promotional Sound Advice subsidiary in southern Florida.

Leading sales lower were electronic audio components including receivers, amps and other separates, and tube TVs. But strength in large flat panel TVs and Tweeter’s home installation business should help boost gross margins 80 basis points higher than last year and 140 basis points over plan, said CFO Joe McGuire. However, some of those gains will be offset by decreased revenue from vendor volume rebate programs, unless the programs can be renegotiated, McGuire said.

The announcement sent Tweeter’s stock price down by one third to $5.35 a share in the hours following its release this morning, and took much of CE retailing with it.