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Ultimate Reports Sharper Earnings

Ultimate Electronics reported sharp earnings gains for its final quarter and fiscal year to January 31, citing increased sales of higher-margin products and improved inventory management.

For the three months the Denver-based electronics specialty retail chain posted a net of $5.17 million, up 50.5% from the year-earlier $3.44 million, as sales increased 16.1% to $130.7 million. Earnings for the year soared fourfold to $8.43 million from $2.16 million, and sales, at just under $385 million, rose 17%. Comparable-store sales were up 13% for the quarter and 16% on the year.

Ultimate said its gross margin was up one full point to 29.4% of sales for the quarter and to 30% on the year. That improvement was credited to increased sales of digital technology products, an increase in inventory turns for the year to 5.2 from fiscal 1999’s 4.9, a 116% jump in DVD sales, and increased sales of accessories.

Its overhead expense-to-sales ratio was held nearly level for the quarter and declined to 26% from 26.7% for the year.

Dave Workman, president of the 31-store chain, said that “consumer demand continues to accelerate in the key new digital technology products, including digital TV, DVD, digital camcorders and cameras.”

Ultimate’s margins benefited from such high-tech product sales, he said, as well as from “tighter management of inventory, which resulted in lower levels of discontinued product, increased inventory turns, and an improved in-stock position throughout the year.”