DENVER -New digital products continue to drive both sales increases and margin improvement at Ultimate Electronics, which reported a 28 percent increase in sales for the fiscal third quarter ended Oct. 31. Sales reached $117.2 million for the period, up from $91.9 million in the year-ago quarter. Comp-store sales for the third quarter were up 12 percent.
Net income in the third quarter hit $3.4 million, nearly double, or 88 percent, of the $1.8 million recorded in the same three months last year.
Gross margins for the third quarter were 32.2 percent, 180 basis points higher than the 30.4 percent reported in the third quarter of 1999.
Selling, general and administrative costs for the third quarter were 27.5 percent of sales, 90 basis points higher than the 26.6 percent of sales recorded in the year-ago three months. This was due to increased pre-opening costs for new stores as well as variable costs associated with the higher margins.
For the nine months, Ultimate Electronics more than doubled its net income, hitting $7.2 million after an extra-ordinary loss, compared with $3.3 million in the year-ago nine months. Sales for the nine months jumped 24 percent to $314.2 million, compared with $254.3 million in the same period last year. Comp-store sales increased 15 percent for the nine months.
Gross margins for the nine months were 32 percent, 170 basis point above the 30.3 percent reported in the prior year's first nine months. SG & A expenses for the nine months were 28.2 percent of sales, compared with 27.5 percent of sales in the first nine months of 1999.
Television/DBS once again held the lion's share of the retailer's sales in the third quarter, reaching 37 percent, a three-percentage-point increase over the third quarter in 1999.
Other category sales percentages for the third quarter include audio, 21 percent, down 1 percentage point from the year-ago quarter; video/DVD, 15 percent, same as last year; other, 12 percent, up 1 percentage point; mobile, 10 percent, down 2 percentage points from 1999; and home office, 5 percent, down 1 percentage point from last year.
"Comp-store sales were up 12 percent on top of the 18 percent increase in the prior year," said Ed McEntire, CEO. "Our operating margin for the quarter was 4.7 percent, up from last year's operating margin of 3.8 percent. Net income represented the 10th consecutive quarter of earnings growth."
Said Dave Workman, president/chief operating officer, "Consumer demand in major growth categories-HDTV, digital camcorder, DBS and DVD-remains strong."