Denver -- Sales of Television/DBS climbed dramatically at Ultimate Electronics during the retailer's fiscal first quarter, with this category -- by far, the companies largest -- accounting for 35 percent of the business during the period, compared with 30 percent during the year-ago first quarter.
The increased TV/DBS business came at the expense of the Audio category, which had it sales percentage dip to 20 percent in the first quarter ended April 30, down from 22 percent in the first quarter of last year.
Video/DVD sales remained the same in both quarters, at 17 percent of total sales, while Mobile products dropped two percentage points to 10 percent. Home Office category sales were down one percentage point to 5 percent in the first quarter, while the Other category remained at 13 percent for both quarters.
Overall, Ultimate Electronics sales soared 21 percent to $115.1 million, compared with $95 million in the year-ago three months. Comp-store sales were flat in the quarter.
Net income climbed to $1.70 million in the first three months, up about 10 percent from the $1.55 million recorded in the year-earlier first quarter.
Gross margins -- impacted by the strong sales of digital TV, offset by the slower growth in the home audio and mobile electronics product categories -- dropped 40 basis points in the first quarter to 30.9 percent, down from 31.3 percent in the year-ago period.
Selling, general and administrative expenses for the quarter were 28.4 percent of sales, 20 basis points higher than the 28.2 percent reported in the first quarter of 2000. The retailer attributed the increase to infrastructure additions necessary for store expansion planned for this year.
Pleased with the company's sales and earnings growth in the first quarter, despite the moderation in consumer spending, Ed McEntire, CEO, said Ultimate Electronics is planning for a 21 percent increase in revenue for fiscal 2002. "We expect to derive the majority of our revenue growth from our new stores, which are performing above expectations," he said.
The chain plans to complete its expansion into the Phoenix market during the remainder of the year with three more stores. It will open the Oklahoma City market with two locations and the St. Louis market with three to four stores.
"Efforts are currently underway to improve our inventory turns and gross margins, and to increase our merchandising and marketing effectiveness," said Dave Workman, president/chief operating officer. "The positive effects of these internal initiatives should be seen by the third quarter of this year.
"The promotional aspects of the retail environment have steadily improved from earlier in the year, as most major consumer electronics retailers appear to be concentrating on maximizing margins during this softer period of retail sales," said Workman.