Tops Reports Q2 Earnings Decline - Twice

Tops Reports Q2 Earnings Decline

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A drop in overall and same-store sales and a loss from its E-commerce venture contributed to the second-quarter earnings decline of metro-N.Y. retailer Tops Appliance City. Tops also announced it would join the ranks of consumer electronics specialty retailers who are scaling back their computer involvement in an effort to improve margins.

For the second quarter Tops reported a net of $76,000 against year-earlier earnings of $363,000, while sales, at $73.5 million, were off 1.3%. For the first half the retailer's net loss ballooned to $5.34 million from last year's $1.32 million, and sales of $135.1 million dipped 0.5%.

The results for this year include equity losses in the online sales venture of $129,000 for the quarter and $204,000 for the half. In those same respective periods last year Tops had one-time gains on debt retirement of $113,000 and $971,000. Excluding those special items, Tops' net from operations was off 18% for the quarter and its loss increased to 5.14 million from $2.29 million.

Same-store sales for the quarter were off 7.5%, but, excluding PC sales, that decline shrinks to 6%. For the full period comparable store sales were off 7.6%.

Executive VP Thomas Zambelli said that during the quarter the 10-store chain's focus was on increasing its gross margin and reducing expenses, and "we were very successful in those areas." The margin, he said, rose to 24.6% of sales from the 22.3% at the same time last year, and, excluding new stores, the overhead expense was reduced by 4.5%.

President Richard Jones attributed the margin growth, in part, to "our more favorable sales mix, resulting from our reduction in the personal computer category." The area's hot July weather, and the rollout of a kitchen cabinet department "should provide us with strong incremental sales and further margin improvement in the September quarter," Jones said.

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