With all types of new-technology television driving top-line sales, Tweeter Home Entertainment Group recorded a 2 percent increase in revenue for its first fiscal quarter, hitting $255.2 million, up from $249.7 million in the year-ago period.
The revenue increase helped Tweeter post a net income of $5.1 million, down from $5.2 million the previous year, for its first quarter. Operating income decreased to $8.7 million in the first three months, ended Dec. 31, compared with $9 million year-on-year.
However, comp-store sales dropped 1 percent.
"We had hoped for a better overall comp performance in the quarter," said Jeff Stone, president/CEO, "but after seeing all the comp-store CE reports for the month of December, we faired well, compared to the industry."
Earnings were also affected by snowstorms that impacted Tweeter's stores in the Northeast and mid-Atlantic regions, which are its most profitable, Stone added.
Stone attributed growing sales of plasma, LCD and DLP television technologies for holding the line on company comps and for boosting total TV sales to 47 percent of total revenue. Specifically, flat-panel sales, including plasma and LCD, accounted for 19 percent of the quarter's revenue, up from 12 percent during the year-ago period, while Tweeter enjoyed "strong double-digit growth" in projection TVs in both unit and dollar volume, with DLP alone accounting for 8 percent of total revenue, Stone said.
By contrast, unit sales of direct-view TVs fell 50 percent during the period. Audio also continued its slide, although Stone said in a conference call that the company is working on initiatives to revive the category, including a greater emphasis on in-wall installation and distributed audio.
Elsewhere, sales of mobile electronics grew 40 percent in dollar volume, and Tweeter's custom installation business enjoyed double-digit growth.
Looking at the retailer's second fiscal quarter, through Jan. 24, comp-store sales are up 3 percent, with company expectations for full-second-quarter comps at between flat and up 3 percent. This compares with a negative 12 percent comp in the second quarter, ending in March of 2003. Second quarter revenue is anticipated in the range of $184 million to $188 million, said Tweeter.
Stone said the company is working diligently to drive down costs, increase attachment rates and basket, grow its in-home service business, improve portfolio management and, through its association with the Retail Masters consultancy, comprised of former Best Buy executives, realize new efficiencies through supply chain initiatives.
Stone also suggested that Tweeter was exploring a new, PC-based media center solution as part of its strategic initiative, and promised to share more details with the investment community this spring.
Looking ahead, CFO Joe McGuire said that the improving macro-economic picture and the ascent of DTV — which he described as "America's greatest replacement cycle" — bodes well for the business.
— Additional reporting by Alan Wolf